8-K
Oaktree Specialty Lending Corp (OCSL)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 4, 2025
Oaktree Specialty Lending Corporation
(Exact name of registrant as specified in its charter)
| Delaware | 814-00755 | 26-1219283 |
|---|---|---|
| (State or other jurisdiction<br> <br>of incorporation) | (Commission<br> <br>File Number) | (IRS Employer<br> <br>Identification No.) |
| 333 South Grand Avenue, 28th Floor<br> <br>Los Angeles, CA | 90071 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (213) 830-6300
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>Symbol(s) | Name of each exchange<br> <br>on which registered |
|---|---|---|
| Common stock, par value $0.01 per share | OCSL | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On February 4, 2025, Oaktree Specialty Lending Corporation (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended December 31, 2024. A copy of the press release is attached hereto as Exhibit 99.1.
On February 4, 2025, the Company will host a conference call to discuss its financial results for the fiscal quarter ended December 31, 2024. In connection therewith, the Company provided an investor presentation on its website at http://www.oaktreespecialtylending.com. A copy of the investor presentation is attached hereto as Exhibit 99.2.
The information disclosed under this Item 2.02, including Exhibits 99.1 and 99.2 hereto, is being “furnished” and is not deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, nor is it deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| 99.1 | Press release of Oaktree Specialty Lending Corporation dated February 4, 2025 |
|---|---|
| 99.2 | Oaktree Specialty Lending Corporation First Quarter 2025 Earnings Presentation |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| OAKTREE SPECIALTY LENDING CORPORATION | ||
|---|---|---|
| Date: February 4, 2025 | By: | /s/ Christopher McKown |
| Name: Christopher McKown<br> <br>Title: Chief Financial Officer and Treasurer |
EX-99.1
Exhibit 99.1
Oaktree Specialty Lending Corporation Announces First Fiscal Quarter 2025 Financial Results
LOS ANGELES, CA, February 4, 2025 -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 December 31, 2024.
Financial Highlights for theQuarter Ended December 31, 2024
| • | Oaktree Capital I, L.P. purchased $100.0 million of shares of OCSL common stock on<br>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 and resulted in a nearly 7% increase to NAV. The equity raise will help grow<br>OCSL’s asset base and further diversify the portfolio. |
|---|---|
| • | Implemented total return hurdle resulting in waived Part I incentive fees of $6.4 million for the quarter ended<br>December 31, 2024. In connection with the institution of this incentive fee cap, the calculation of the Part I incentive fee will consider capital gains and losses when determining Part I incentive fees payable. This new arrangement includes a<br>lookback provision that commences effective October 1, 2024, and will build over time to a rolling 12 quarter lookback by the Company’s 2027 fiscal year-end. |
| --- | --- |
| • | Total investment income was $86.6 million ($1.05 per share) for the first fiscal quarter of 2025, as compared<br>with $94.7 million ($1.15 per share) for the fourth fiscal quarter of 2024. Adjusted total investment income was $87.1 million ($1.06 per share) for the first fiscal quarter, as compared with $95.0 million ($1.16 per share) for the<br>fourth fiscal quarter of 2024. The decrease was driven by (i) lower interest income, which was attributable to decreases in reference rates, the impact of certain investments that were placed on<br>non-accrual status, a smaller investment portfolio and lower original issue discount (“OID”) acceleration from investment repayments, (ii) lower fee income from a decrease in prepayment fees and<br>(iii) lower dividend income from the Company’s investment in Senior Loan Fund JV I, LLC (“SLF JV I”). |
| --- | --- |
| • | GAAP net investment income was $44.3 million ($0.54 per share) for the first fiscal quarter of 2025, as<br>compared with $44.9 million ($0.55 per share) for the fourth fiscal quarter of 2024. The decrease for the quarter was primarily driven by lower total investment income and higher operating expenses, partially offset by lower interest expense<br>and lower management and income-based (“Part I”) incentive fees (net of fees waived). |
| --- | --- |
| • | Adjusted net investment income was $44.7 million ($0.54 per share) for the first fiscal quarter of 2025, as<br>compared with $45.2 million ($0.55 per share) for the fourth fiscal quarter of 2024. The decrease for the quarter was primarily driven by lower adjusted total investment income and higher operating expenses, partially offset by lower interest<br>expense and lower management and Part I incentive fees (net of fees waived). |
| --- | --- |
| • | Net asset value (“NAV”) per share was $17.63 as of December 31, 2024, down as compared with $18.09 as<br>of September 30, 2024. The decline from September 30, 2024 primarily reflected losses on certain debt and equity investments. |
| --- | --- |
| • | Originated $198.1 million of new investment commitments and received $352.4 million of proceeds from<br>prepayments, exits, other paydowns and sales during the quarter ended December 31, 2024. The weighted average yield on new debt investments was 9.6%. |
| --- | --- |
| • | Total debt outstanding was $1,610.0 million as of December 31, 2024. The total debt to equity ratio was<br>1.11x, and the net debt to equity ratio was 1.03x, after adjusting for cash and cash equivalents. |
| --- | --- |
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| • | Liquidity as of December 31, 2024 was composed of $112.9 million of unrestricted cash and cash equivalents<br>and $957.5 million of undrawn capacity under the Company’s credit facilities (subject to borrowing base and other limitations). Unfunded investment commitments were $302.3 million, or $275.2 million excluding unfunded commitments<br>to the Company’s joint ventures. Of the $275.2 million, approximately $243.7 million can be drawn immediately with the remaining amount subject to certain milestones that must be met by portfolio companies or other restrictions.<br> |
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| • | A quarterly and supplemental cash distribution was declared of $0.40 per share and $0.07 per share, respectively,<br>payable in cash on March 31, 2025 to stockholders of record on March 17, 2025. The modification to the dividend policy introduces a stable base dividend, which is anticipated to be sustainable across market cycles, amid fluctuations in<br>rates and spreads. |
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Armen Panossian, Chief Executive Officer and Co-Chief Investment Officer said, “We had several positive outcomes within the portfolio, but continued to face challenges with several names. We remain focused on our underperforming borrowers, working through each situation to identify the appropriate course of action.”
“We remain committed to our shareholders and growing our business. As part of that process, Oaktree has purchased $100 million of shares at NAV. And, in addition to the permanent fee reduction announced last year and additional support provided via voluntary fee waivers, starting with the quarter ending December 31, 2024, we have instituted a cap in the calculation of our Part I Incentive Fee to consider capital gains and losses, which will build up over time and look back to 12 quarters by our 2027 fiscal year-end. We believe these actions further demonstrate our ongoing commitment to our shareholders while providing the capital to execute on our long-term initiatives.”
Distribution Declaration
The Board of Directors declared a quarterly distribution of $0.40 per share, payable in cash on March 31, 2025 to stockholders of record on March 17, 2025. The Board of Directors also declared a supplemental distribution of $0.07 per share, payable in cash on March 31, 2025 to stockholders of record on March 17, 2025. For the quarter ended December 31, 2024 and going forward, in addition to a quarterly base dividend of $0.40 per share, the Company’s Board of Directors expects to declare, when applicable, a quarterly supplemental dividend in an amount to be determined each quarter. ****
Distributions are paid primarily from distributable (taxable) income. To the extent taxable earnings for a fiscal taxable year fall below the total amount of distributions for that fiscal year, a portion of those distributions may be deemed a return of capital to the Company’s stockholders.
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Results of Operations
| For the three months ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands, except per share data) | December 31,<br>2024<br>(unaudited) | September 30,<br>2024<br>(unaudited) | December 31,<br>2023<br>(unaudited) | ||||||
| GAAP operating results: | |||||||||
| Interest income | $ | 78,422 | $ | 83,626 | $ | 91,414 | |||
| PIK interest income | 5,728 | 6,018 | 3,849 | ||||||
| Fee income | 1,679 | 3,897 | 1,307 | ||||||
| Dividend income | 818 | 1,144 | 1,415 | ||||||
| Total investment income | **** | 86,647 | **** | **** | 94,685 | **** | **** | 97,985 | **** |
| Net expenses | 42,082 | 49,764 | 53,796 | ||||||
| Net investment income before taxes | **** | 44,565 | **** | **** | 44,921 | **** | **** | 44,189 | **** |
| (Provision) benefit for taxes on net investment income | (263 | ) | — | — | |||||
| Net investment income | **** | 44,302 | **** | **** | 44,921 | **** | **** | 44,189 | **** |
| Net realized and unrealized gains (losses), net of taxes | (37,063 | ) | (8,008 | ) | (33,654 | ) | |||
| Net increase (decrease) in net assets resulting from operations | $ | 7,239 | **** | $ | 36,913 | **** | $ | 10,535 | **** |
| Total investment income per common share | $ | 1.05 | **** | $ | 1.15 | **** | $ | 1.26 | **** |
| Net investment income per common share | $ | 0.54 | **** | $ | 0.55 | **** | $ | 0.57 | **** |
| Net realized and unrealized gains (losses), net of taxes per common share | $ | (0.45 | ) | $ | (0.10 | ) | $ | (0.43 | ) |
| Earnings (loss) per common share — basic and diluted | $ | 0.09 | **** | $ | 0.45 | **** | $ | 0.14 | **** |
| Non-GAAP Financial Measures^1^: | |||||||||
| Adjusted total investment income | $ | 87,070 | **** | $ | 95,000 | **** | $ | 98,014 | **** |
| Adjusted net investment income | $ | 44,725 | **** | $ | 45,236 | **** | $ | 44,218 | **** |
| Adjusted net realized and unrealized gains (losses), net of taxes | $ | (37,124 | ) | $ | (8,322 | ) | $ | (32,858 | ) |
| Adjusted earnings (loss) | $ | 7,601 | **** | $ | 36,914 | **** | $ | 11,360 | **** |
| Adjusted total investment income per share | $ | 1.06 | **** | $ | 1.16 | **** | $ | 1.26 | **** |
| Adjusted net investment income per share | $ | 0.54 | **** | $ | 0.55 | **** | $ | 0.57 | **** |
| Adjusted net realized and unrealized gains (losses), net of taxes per share | $ | (0.45 | ) | $ | (0.10 | ) | $ | (0.42 | ) |
| Adjusted earnings (loss) per share | $ | 0.09 | **** | $ | 0.45 | **** | $ | 0.15 | **** |
^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) | December 31, 2024<br>(unaudited) | September 30, 2024 | December 31, 2023<br>(unaudited) | ||||||
| Select balance sheet and other data: | |||||||||
| Cash and cash equivalents | $ | 112,913 | $ | 63,966 | $ | 112,369 | |||
| Investment portfolio at fair value | 2,835,294 | 3,021,279 | 3,018,552 | ||||||
| Total debt outstanding (net of unamortized financing costs) | 1,577,795 | 1,638,693 | 1,622,717 | ||||||
| Net assets | 1,449,815 | 1,487,811 | 1,511,651 | ||||||
| Net asset value per share | 17.63 | 18.09 | 19.14 | ||||||
| Total debt to equity ratio | 1.11 | x | 1.12 | x | 1.10 | x | |||
| Net debt to equity ratio | 1.03 | x | 1.07 | x | 1.02 | x |
Adjusted total investment income for the quarter ended December 31, 2024 was $87.1 million and included $78.9 million of interest income from portfolio investments, $5.7 million of payment-in-kind (“PIK”) interest income, $1.7 million of fee income and $0.8 million of dividend income. The $7.9 million quarterly decline in adjusted total investment income was primarily due to a $5.4 million decrease in interest income, which resulted from a decreases in reference rates, the impact of certain investments that were placed on non-accrual status, a smaller investment portfolio and lower OID acceleration from investment repayments. Additionally, there was a $2.2 million decrease in fee income driven by lower prepayment fees and a $0.3 million reduction in dividend income from the Company’s investment in SLF JV I.
Net expenses for the quarter ended December 31, 2024 totaled $42.1 million, down $7.7 million from the quarter ended September 30, 2024. The decrease for the quarter was primarily driven by $6.2 million of lower Part I incentive fees (net of
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fees waived) and $1.5 million of lower interest expense due to lower reference rates on the Company’s floating rate liabilities. ****
Adjusted net investment income was $44.7 million ($0.54 per share) for the quarter ended December 31, 2024, which was down from $45.2 million ($0.55 per share) for the quarter ended September 30, 2024. The decline of $0.5 million primarily reflected $7.9 million of lower adjusted total investment income and an increase in income tax expense of $0.3 million, partially offset by $7.7 million of lower net expenses. ****
Adjusted net realized and unrealized losses, net of taxes, were $37.1 million for the quarter ended December 31, 2024, primarily reflecting realized and unrealized losses on certain debt and equity investments. ****
Portfolio and Investment Activity
| As of | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands) | December 31, 2024<br>(unaudited) | September 30, 2024<br>(unaudited) | December 31, 2023<br>(unaudited) | ||||||
| Investments at fair value | $ | 2,835,294 | $ | 3,021,279 | $ | 3,018,552 | |||
| Number of portfolio companies | 136 | 144 | 146 | ||||||
| Average portfolio company debt size | $ | 22,000 | $ | 22,000 | $ | 20,200 | |||
| Asset class: | |||||||||
| First lien debt | 81.8 | % | 81.7 | % | 77.9 | % | |||
| Second lien debt | 3.0 | % | 3.5 | % | 8.4 | % | |||
| Unsecured debt | 3.9 | % | 3.6 | % | 2.5 | % | |||
| Equity | 4.8 | % | 5.0 | % | 4.8 | % | |||
| JV interests | 6.5 | % | 6.1 | % | 6.4 | % | |||
| Non-accrual debt investments: | |||||||||
| Non-accrual investments at fair value | $ | 105,326 | $ | 114,292 | $ | 120,713 | |||
| Non-accrual investments at cost | 138,703 | 140,748 | 174,897 | ||||||
| Non-accrual investments as a percentage of debt investments at fair<br>value | 3.9 | % | 4.0 | % | 4.2 | % | |||
| Non-accrual investments as a percentage of debt investments at<br>cost | 5.1 | % | 4.9 | % | 5.9 | % | |||
| Number of investments on non-accrual | 9 | 9 | 7 | ||||||
| Interest rate type: | |||||||||
| Percentage floating-rate | 87.6 | % | 88.4 | % | 84.3 | % | |||
| Percentage fixed-rate | 12.4 | % | 11.6 | % | 15.7 | % | |||
| Yields: | |||||||||
| Weighted average yield on debt investments^1^ | 10.7 | % | 11.2 | % | 12.2 | % | |||
| Cash component of weighted average yield on debt investments | 9.5 | % | 10.0 | % | 11.1 | % | |||
| Weighted average yield on total portfolio investments^2^ | 10.2 | % | 10.7 | % | 11.7 | % | |||
| Investment activity: | |||||||||
| New investment commitments | $ | 198,100 | $ | 259,000 | $ | 370,300 | |||
| New funded investment activity^3^ | $ | 201,300 | $ | 232,700 | $ | 367,600 | |||
| Proceeds from prepayments, exits, other paydowns and sales | $ | 352,400 | $ | 338,300 | $ | 213,500 | |||
| Net new investments^4^ | $ | (151,100 | ) | $ | (105,600 | ) | $ | 154,100 | |
| Number of new investment commitments in new portfolio companies | 5 | 9 | 14 | ||||||
| Number of new investment commitments in existing portfolio companies | 8 | 10 | 10 | ||||||
| Number of portfolio company exits | 13 | 23 | 10 | ||||||
| ^1^ | Annual stated yield earned plus net annual amortization of OID or premium earned on accruing investments, including the<br>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<br>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<br>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<br>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.<br> | ||||||||
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| ^4^ | Net new investments consists of new funded investment activity less proceeds from prepayments, exits, other paydowns and<br>sales. | ||||||||
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As of December 31, 2024, the fair value of the investment portfolio was $2.8 billion and was composed of investments in 136 companies. These included debt investments in 114 companies, equity investments in 42 companies, and the Company’s joint venture investments in SLF JV I and OCSI Glick JV LLC (“Glick JV”). 22 of the equity investments were in companies in which the Company also had a debt investment. ****
As of December 31, 2024, 94.4% of the Company’s portfolio at fair value consisted of debt investments, including 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. This compared to 81.7% of first lien loans, 3.5% of second lien loans and 9.0% of unsecured debt investments, including the debt investments in SLF JV I and Glick JV, as of September 30, 2024. ****
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. As of September 30, 2024, there were nine investments on non-accrual status, which represented 4.9% and 4.0% of the debt portfolio at cost and fair value, respectively.
SLF JV I
The Company’s investments in SLF JV I totaled $135.4 million at fair value as of December 31, 2024, up 0.1% from $135.2 million as of September 30, 2024.
As of December 31, 2024, SLF JV I had $344.9 million in assets, including senior secured loans to 42 portfolio companies. This compared to $375.8 million in assets, including senior secured loans to 48 portfolio companies, as of September 30, 2024. SLF JV I generated cash interest income of $3.4 million for the Company during the quarter ended December 31, 2024, down from $3.6 million in the prior quarter. In addition, SLF JV I generated dividend income of $0.7 million for the Company during the quarter ended December 31, 2024, down from $1.1 million in the prior quarter. As of December 31, 2024, SLF JV I had $95.0 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 1.1x. ****
Glick JV
The Company’s investments in Glick JV totaled $49.6 million at fair value as of December 31, 2024, up 1.4% from $48.9 million as of September 30, 2024. The increase was primarily driven by Glick JV’s use of leverage and unrealized appreciation in the underlying investment portfolio. ****
As of December 31, 2024, Glick JV had $127.9 million in assets, including senior secured loans to 39 portfolio companies. This compared to $145.0 million in assets, including senior secured loans to 44 portfolio companies, as of September 30, 2024. Glick JV generated cash interest income of $1.4 million for the Company during the quarter ended December 31, 2024, down from $1.5 million in the prior quarter. As of December 31, 2024, 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 1.2x. ****
Liquidity and Capital Resources
As of December 31, 2024, the Company had total principal value of debt outstanding of $1,610.0 million, including $660.0 million of outstanding borrowings under its revolving credit facilities, $300.0 million of the 3.500% Notes due 2025, $350.0 million of the 2.700% Notes due 2027 and $300.0 million of the 7.100% Notes due 2029. The funding mix was composed of 41% secured and 59% unsecured borrowings as of December 31, 2024. The Company was in compliance with all financial covenants under its credit facilities as of December 31, 2024.
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As of December 31, 2024, the Company had $112.9 million of unrestricted cash and cash equivalents and $957.5 million of undrawn capacity on its credit facilities (subject to borrowing base and other limitations). As of December 31, 2024, unfunded investment commitments were $302.3 million, or $275.2 million excluding unfunded commitments to the Company’s joint ventures. Of the $275.2 million, approximately $243.7 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 December 31, 2024, the weighted average interest rate on debt outstanding, including the effect of the interest rate swap agreements was 6.2%, down from 6.7% as of September 30, 2024, primarily driven by the impact of lower interest rates on the Company’s floating rate liabilities. ****
The Company’s total debt to equity ratio was 1.11x and 1.12x as of each of December 31, 2024 and September 30, 2024, respectively. The Company’s net debt to equity ratio was 1.03x and 1.07x as of each of December 31, 2024 and September 30, 2024, respectively. ****
Incentive Fee Lookback
Effective as of October 1, 2024, Oaktree has agreed to waive incentive fees on income to institute an incentive fee cap (also known as a “total return hurdle”) in the calculation of the Part I Incentive Fee, which will consider capital gains and losses. This new arrangement includes a lookback provision that commences effective October 1, 2024, and will build over time to a rolling 12-quarter lookback by the Company’s 2027 fiscal year-end. Additional details regarding this new arrangement can be found in the Company’s Form 10-Q filed on February 4, 2025.
Purchase Agreement
On January 31, 2025, the Company and Oaktree Capital I, L.P., an affiliate of the Adviser, entered into a purchase agreement pursuant to which Oaktree Capital I, L.P. purchased 5,672,149 shares of the Company’s common stock on February 3, 2025 for an aggregate purchase price of $100.0 million. These shares were sold at the Company’s net asset value per share as of January 31, 2025, which was $17.63 per share and calculated in accordance with Section 23 of the Investment Company Act of 1940, as amended. Oaktree Capital I, L.P. has agreed not to sell the shares acquired in this transaction through February 3, 2026. This transaction represented a 10% premium to the closing stock price on January 31, 2025, and resulted in a nearly 7% increase in net assets, which (coupled with additional leverage) will increase dry powder for deployment, enabling growth and further diversification of the portfolio.
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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” –<br>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.<br> |
|---|---|
| • | “Adjusted Net Investment Income” and “Adjusted Net Investment Income Per Share” –<br>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<br>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 andUnrealized 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<br>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<br>(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 fees^1^, if any.<br> |
| --- | --- |
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
^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.
7
“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 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2024(unaudited) | September 30, 2024(unaudited) | December 31, 2023(unaudited) | ||||||||||
| ($ in thousands, except per share data) | Amount | Per Share | Amount | Per Share | Amount | Per Share | ||||||
| GAAP total investment income | $ | 86,647 | $ | 1.05 | $ | 94,685 | $ | 1.15 | $ | 97,985 | $ | 1.26 |
| Interest income amortization (accretion) related to merger accounting adjustments | 423 | 0.01 | 315 | — | 29 | — | ||||||
| Adjusted total investment income | $ | 87,070 | $ | 1.06 | $ | 95,000 | $ | 1.16 | $ | 98,014 | $ | 1.26 |
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 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2024(unaudited) | September 30, 2024(unaudited) | December 31, 2023(unaudited) | ||||||||||
| ($ in thousands, except per share data) | Amount | Per Share | Amount | Per Share | Amount | Per Share | ||||||
| GAAP net investment income | $ | 44,302 | $ | 0.54 | $ | 44,921 | $ | 0.55 | $ | 44,189 | $ | 0.57 |
| Interest income amortization (accretion) related to merger accounting adjustments | 423 | 0.01 | 315 | — | 29 | — | ||||||
| Part II incentive fee | — | — | — | — | — | — | ||||||
| Adjusted net investment income | $ | 44,725 | $ | 0.54 | $ | 45,236 | $ | 0.55 | $ | 44,218 | $ | 0.57 |
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 | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2024(unaudited) | September 30, 2024(unaudited) | December 31, 2023(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 | $ | (37,063 | ) | $ | (0.45 | ) | $ | (8,008 | ) | $ | (0.10 | ) | $ | (33,654 | ) | $ | (0.43 | ) |
| Net realized and unrealized gains (losses) related to merger accounting adjustments | (61 | ) | — | (314 | ) | — | 796 | 0.01 | ||||||||||
| Adjusted net realized and unrealized gains (losses), net of taxes | $ | (37,124 | ) | $ | (0.45 | ) | $ | (8,322 | ) | $ | (0.10 | ) | $ | (32,858 | ) | $ | (0.42 | ) |
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 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2024(unaudited) | September 30, 2024(unaudited) | December 31, 2023(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 | $ | 7,239 | $ | 0.09 | $ | 36,913 | $ | 0.45 | $ | 10,535 | $ | 0.14 | ||
| Interest income amortization (accretion) related to merger accounting adjustments | 423 | 0.01 | 315 | — | 29 | — | ||||||||
| Net realized and unrealized gains (losses) related to merger accounting adjustments | (61 | ) | — | (314 | ) | — | 796 | 0.01 | ||||||
| Adjusted earnings (loss) | $ | 7,601 | $ | 0.09 | $ | 36,914 | $ | 0.45 | $ | 11,360 | $ | 0.15 |
8
Conference Call Information
Oaktree Specialty Lending will host a conference call to discuss its first fiscal quarter 2025 results at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time on February 4, 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 1211943, 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 in the economy, financial markets and political environment, including the impacts of inflation and elevated interest rates; (ii) risks associated with possible disruption in the operations of the Company or the economy generally due to terrorism, war or other geopolitical conflict (including the current conflicts in Ukraine and Israel), 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.
9
Contacts
Investor Relations:
Oaktree Specialty Lending Corporation
Dane Kleven
(213) 356-3260
ocsl-ir@oaktreecapital.com
Media Relations:
Financial Profiles, Inc.
Moira Conlon
(310) 478-2700
mediainquiries@oaktreecapital.com
10
Oaktree Specialty Lending Corporation
Consolidated Statements of Assets and Liabilities
(in thousands, except per share amounts)
| September 30, 2024 | |||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Investments at fair value: | |||||
| Control investments (cost December 31, 2024: 374,509; cost September 30, 2024: 372,901) | 267,782 | $ | 289,404 | ||
| Affiliate investments (cost December 31, 2024: 37,358; cost September 30, 2024: 38,175) | 35,180 | 35,677 | |||
| Non-control/Non-affiliate<br>investments (cost December 31, 2024: 2,576,053; cost September 30, 2024: 2,733,843) | 2,532,332 | 2,696,198 | |||
| Total investments at fair value (cost December 31, 2024: 2,987,920; September 30, 2024:<br>3,144,919) | 2,835,294 | **** | **** | 3,021,279 | **** |
| Cash and cash equivalents | 112,913 | 63,966 | |||
| Restricted cash | 13,159 | 14,577 | |||
| Interest, dividends and fees receivable | 25,290 | 38,804 | |||
| Due from portfolio companies | 408 | 12,530 | |||
| Receivables from unsettled transactions | 55,661 | 17,548 | |||
| Due from broker | 21,880 | 17,060 | |||
| Deferred financing costs | 10,936 | 11,677 | |||
| Deferred offering costs | 162 | 125 | |||
| Derivative assets at fair value | 6,652 | — | |||
| Other assets | 1,437 | 775 | |||
| Total assets | 3,083,792 | **** | $ | 3,198,341 | **** |
| LIABILITIES AND NET ASSETS | |||||
| Liabilities: | |||||
| Accounts payable, accrued expenses and other liabilities | 3,371 | $ | 3,492 | ||
| Base management fee and incentive fee payable | 8,930 | 15,517 | |||
| Due to affiliate | 1,508 | 4,088 | |||
| Interest payable | 17,600 | 16,231 | |||
| Payables from unsettled transactions | — | 15,666 | |||
| Derivative liabilities at fair value | 24,759 | 16,843 | |||
| Deferred tax liability | 14 | — | |||
| Credit facilities payable | 660,000 | 710,000 | |||
| Unsecured notes payable (net of 4,401 and 4,935 of unamortized financing costs as of December 31, 2024 and<br>September 30, 2024, respectively) | 917,795 | 928,693 | |||
| Total liabilities | 1,633,977 | **** | **** | 1,710,530 | **** |
| Commitments and contingencies | |||||
| Net assets: | |||||
| Common stock, 0.01 par value per share, 250,000 shares authorized; 82,245 and 82,245 shares issued and outstanding as of<br>December 31, 2024 and September 30, 2024, respectively | 822 | 822 | |||
| Additional<br>paid-in-capital | 2,264,449 | 2,264,449 | |||
| Accumulated overdistributed earnings | (815,456 | ) | (777,460 | ) | |
| Total net assets (equivalent to 17.63 and 18.09 per common share as of December 31, 2024 and September 30, 2024, respectively) | 1,449,815 | **** | **** | 1,487,811 | **** |
| Total liabilities and net assets | 3,083,792 | **** | $ | 3,198,341 | **** |
All values are in US Dollars.
11
Oaktree Specialty Lending Corporation
Consolidated Statements of Operations
(inthousands, except per share amounts)
| Three months ended | Three months ended | Three months ended | |||||||
|---|---|---|---|---|---|---|---|---|---|
| December 31, 2024 | September 30, 2024 | December 31, 2023 | |||||||
| (unaudited) | (unaudited) | (unaudited) | |||||||
| Interest income: | |||||||||
| Control investments | $ | 5,226 | $ | 6,012 | $ | 6,005 | |||
| Affiliate investments | 166 | 159 | 324 | ||||||
| Non-control/Non-affiliate<br>investments | 71,809 | 76,476 | 82,721 | ||||||
| Interest on cash and cash equivalents | 1,221 | 979 | 2,364 | ||||||
| Total interest income | **** | 78,422 | **** | **** | 83,626 | **** | **** | 91,414 | **** |
| PIK interest income: | |||||||||
| Control investments | 830 | 765 | 544 | ||||||
| Affiliate investments | 28 | 45 | — | ||||||
| Non-control/Non-affiliate<br>investments | 4,870 | 5,208 | 3,305 | ||||||
| Total PIK interest income | **** | 5,728 | **** | **** | 6,018 | **** | **** | 3,849 | **** |
| Fee income: | |||||||||
| Control investments | — | 12 | 13 | ||||||
| Affiliate investments | — | — | 5 | ||||||
| Non-control/Non-affiliate<br>investments | 1,679 | 3,885 | 1,289 | ||||||
| Total fee income | **** | 1,679 | **** | **** | 3,897 | **** | **** | 1,307 | **** |
| Dividend income: | |||||||||
| Control investments | 700 | 1,050 | 1,400 | ||||||
| Non-control/Non-affiliate<br>investments | 118 | 94 | 15 | ||||||
| Total dividend income | **** | 818 | **** | **** | 1,144 | **** | **** | 1,415 | **** |
| Total investment income | **** | 86,647 | **** | **** | 94,685 | **** | **** | 97,985 | **** |
| Expenses: | |||||||||
| Base management fee | 8,144 | 8,550 | 11,477 | ||||||
| Part I incentive fee | 7,913 | 8,943 | 9,028 | ||||||
| Professional fees | 1,067 | 862 | 1,504 | ||||||
| Directors fees | 160 | 160 | 160 | ||||||
| Interest expense | 30,562 | 32,058 | 32,170 | ||||||
| Administrator expense | 437 | 465 | 366 | ||||||
| General and administrative expenses | 926 | 704 | 591 | ||||||
| Total expenses | **** | 49,209 | **** | **** | 51,742 | **** | **** | 55,296 | **** |
| Management fees waived | (750 | ) | (750 | ) | (1,500 | ) | |||
| Part I incentive fees waived | (6,377 | ) | (1,228 | ) | — | ||||
| Net expenses | **** | 42,082 | **** | **** | 49,764 | **** | **** | 53,796 | **** |
| Net investment income before taxes | **** | 44,565 | **** | **** | 44,921 | **** | **** | 44,189 | **** |
| (Provision) benefit for taxes on net investment income | (263 | ) | — | — | |||||
| Net investment income | **** | 44,302 | **** | **** | 44,921 | **** | **** | 44,189 | **** |
| Unrealized appreciation (depreciation): | |||||||||
| Control investments | (23,230 | ) | (12,909 | ) | 1,339 | ||||
| Affiliate investments | 320 | 207 | (925 | ) | |||||
| Non-control/Non-affiliate<br>investments | (7,198 | ) | 60,159 | (17,615 | ) | ||||
| Foreign currency forward contracts | 10,494 | (4,278 | ) | (7,824 | ) | ||||
| Net unrealized appreciation (depreciation) | **** | (19,614 | ) | **** | 43,179 | **** | **** | (25,025 | ) |
| Realized gains (losses): | |||||||||
| Control investments | — | — | 786 | ||||||
| Affiliate investments | (288 | ) | — | — | |||||
| Non-control/Non-affiliate<br>investments | (17,056 | ) | (50,349 | ) | (13,340 | ) | |||
| Foreign currency forward contracts | 34 | (1,499 | ) | 4,101 | |||||
| Net realized gains (losses) | **** | (17,310 | ) | **** | (51,848 | ) | **** | (8,453 | ) |
| (Provision) benefit for taxes on realized and unrealized gains (losses) | **** | (139 | ) | **** | 661 | **** | **** | (176 | ) |
| Net realized and unrealized gains (losses), net of taxes | **** | (37,063 | ) | **** | (8,008 | ) | **** | (33,654 | ) |
| Net increase (decrease) in net assets resulting from operations | $ | 7,239 | **** | $ | 36,913 | **** | $ | 10,535 | **** |
| Net investment income per common share — basic and diluted | $ | 0.54 | **** | $ | 0.55 | **** | $ | 0.57 | **** |
| Earnings (loss) per common share — basic and diluted | $ | 0.09 | **** | $ | 0.45 | **** | $ | 0.14 | **** |
| Weighted average common shares outstanding — basic and diluted | 82,245 | 82,245 | 77,840 |
12
EX-99.2
Exhibit 99.2 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 implement Oaktree’s future plans with respect to our business; the ability of Oaktree and its affiliates to attract and retain highly talented professionals; our business prospects and the prospects of our portfolio companies; the impact of the investments that we expect to make; the ability of our portfolio companies to achieve their objectives; our expected financings and investments and additional leverage we may seek to incur in the future; the adequacy of our cash resources and working capital; the timing of cash flows, if any, from the operations of our portfolio companies; the cost or potential outcome of any litigation to which we may be a party; and the impact of current global economic conditions, including those caused by inflation, an elevated (but decreasing) interest rate environment and geopolitical risks on all of the foregoing. 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 presentation 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 for the fiscal year ended September 30, 2024 and our quarterly report on Form 10-Q for the quarter ended December 31, 2024. Other factors that could cause actual results to differ materially include: changes in the economy, financial markets and political environment, including the impacts of inflation and elevated interest rates; risks associated with possible disruption in our operations or the economy generally due to terrorism, war or other geopolitical conflict, natural disasters, pandemics or cybersecurity incidents; future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities); conditions in our operating areas, particularly with respect to business development companies or regulated investment companies; and other considerations 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 SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Calculation of Assets Under Management References to total assets under management or AUM represent assets managed by Oaktree and a proportionate amount of the AUM reported by DoubleLine Capital LP ( DoubleLine Capital ), in which Oaktree owns a 20% minority interest. Oaktree's methodology for calculating AUM includes (i) the net asset value (“NAV”) of assets managed directly by Oaktree, (ii) the leverage on which management fees are charged, (iii) undrawn capital that Oaktree is entitled to call from investors in Oaktree funds pursuant to their capital commitments, (iv) for collateralized loan obligation vehicles ( CLOs ), the aggregate par value of collateral assets and principal cash, (v) for publicly-traded business development companies, gross assets (including assets acquired with leverage), net of cash, and (vi) Oaktree's pro rata portion (20%) of the AUM reported by DoubleLine Capital. This calculation of AUM is not based on the definitions of AUM that may be set forth in agreements governing the investment funds, vehicles or accounts managed and is not calculated pursuant to regulatory definitions. Unless otherwise indicated, data provided herein are dated as of December 31, 2024. First Quarter 2025 Investor Presentation NASDAQ: OCSL
Strategic Actions In Support of OCSL • On February 3, Oaktree purchased $100 million of newly issued shares of OCSL common stock at a price of $17.63/share equal to net asset value per share on January 31, 2025 • This transaction represented a 10% premium to the closing stock price on January 31, 2025, and resulted in a nearly Equity Raise 7% increase in net assets • The equity raise (coupled with additional leverage) will increase dry powder for deployment, enabling growth and further diversification of the portfolio • Oaktree instituted an incentive fee cap (i.e., a total return hurdle) which resulted in a waiver of $6.4 million of Part I incentive fees during the quarter New Incentive • This new arrangement includes a lookback provision that commences October 1, 2024, building to a rolling 12 Fee Cap quarter lookback by the Company's 2027 fiscal year-end • Although we have voluntarily waived fees in previous quarters, this formalizes our process and provides clarity Oaktree remains committed to the long-term growth and success of OCSL 2
Financial Highlights for the Quarter Ended December 31, 2024 • $0.54 per share for both adjusted net investment income and GAAP net investment income, as compared with $0.55 per share for Adjusted Net 1 Investment Income the quarter ended September 30, 2024 • $17.63 per share, down as compared with $18.09 per share as of September 30, 2024 Net Asset Value Per Share • The decrease was primarily driven by write-downs on certain debt and equity investments • Instituted new dividend framework of a base plus supplemental dividend Dividends • Declared a quarterly and supplemental cash distribution of $0.40 per share and $0.07 per share, respectively • Distributions will be payable on March 31, 2025 to stockholders of record as of March 17, 2025 • $198 million of new investment commitments • 9.6% weighted average yield on new debt investments Investment Activity • $201 million of new investment fundings • Received $352 million of proceeds from prepayments, exits, other paydowns and sales • $2.8 billion at fair value across 136 portfolio companies • 10.7% weighted average yield on debt investments, down from 11.2% in the prior quarter Portfolio Characteristics • 85% senior secured, including 82% first lien loans • 88% of debt portfolio was floating rate • 1.03x net debt to equity ratio Capital Structure & Liquidity • $113 million of cash and $958 million of undrawn capacity on credit facilities 3 1. See appendix for a description of this non-GAAP measure.
Portfolio Summary Portfolio Characteristics Portfolio Composition (At fair value) (As % of total portfolio at fair value; $ in millions) 7% 4% 5% First Lien – $2,320 3% Second Lien – $84 $2.8bn 136 Unsecured Debt – $110 Total Investments Portfolio Companies Equity – $137 Joint Ventures – $185 82% 2,3 Top 10 Industries % FV 10.7% $142mm Weighted Average Yield on Median Debt Portfolio Software & Services 23.1% 1 Debt Investments Company EBITDA Health Care Equipment & Services 10.5% Capital Goods 9.3% Pharmaceuticals, Biotechnology & Life Sciences 6.5% Commercial & Professional Services 5.4% Real Estate 5.2% 85% 88% Consumer Services 5.2% Senior Secured Floating Rate Media & Entertainment 4.8% Debt Investments Diversified Financials 4.6% Consumer Discretionary Distribution & Retail 4.6% Total Top 10 79.3% As of December 31, 2024 Note: Numbers may not sum due to rounding. 1. Excludes investments in negative EBITDA borrowers, life sciences lending, royalty interest financings, structured products, non-accruals, recurring revenue businesses and other non-EBITDA borrowers. 2. Based on GICS industry group classification. 3. Excludes multi-sector holdings, which is primarily composed of investments in Senior Loan Fund JV I LLC (the “Kemper JV”) and OCSI Glick JV LLC (the “Glick JV”), joint ventures that invest primarily in senior 4 secured loans of middle market companies.
Investment Activity New Investment Highlights Historical Funded Originations and Exits ($ in millions) $377 $400 $352 $338 $323 $293 ($ in millions) $300 Total New $233 $201 Commitments $185 $200 $198 5 new borrowers $100 Existing Borrowers $0 $50 3/31/24 6/30/24 9/30/24 12/31/24 1 2 New Funded Investments Investment Exits 9.6% Seniority Breakdown weighted average yield on new debt commitments (As % of new investment commitments; $ in millions) New Borrowers $148 100% First Lien - $198mm also held by other Oaktree funds Second Lien - $0mm Subordinated Debt - $0mm 100% As of December 31, 2024 Note: Numbers rounded to the nearest million or percentage point and may not sum as a result. 1. New funded investments includes drawdowns on existing delayed draw and revolver commitments. 5 2. Investment exits includes proceeds from prepayments, exits, other paydowns and sales.
Investment Activity (continued) New Investment Commitment Detail ($ in millions) Security Type Market Investment Unsecured Private Primary Secondary Avg. Secondary Fiscal Quarter Number of Deals First LienSecond Lien Commitments & Other Placement (Public) (Public) Purchase Price 1Q2021 $286 21 $196 $90 -- $181 $84 $22 93% 2Q2021 $318 20 $253 $44 $21 $245 $63 $10 93% 3Q2021 $178 10 $141 $25 $12 $104 $70 $5 97% 4Q2021 $385 20 $350 $13 $23 $304 $79 $2 100% 1Q2022 $300 21 $220 $77 $2 $227 $73 -- N/A 2Q2022 $228 25 $163 $17 $48 $162 $26 $40 96% 3Q2022 $132 28 $100 $6 $25 $63 $5 $63 91% 4Q2022 $97 11 $65 -- $32 $71 $22 $4 92% 1Q2023 $250 25 $214 $10 $26 $188 $49 $14 82% 2Q2023 $124 9 $124 -- -- $118 $5 $1 81% 3Q2023 $251 10 $227 $24 $0.2 $224 $20 $7 85% 4Q2023 $87 6 $87 -- -- $76 $12 -- N/A 1Q2024 $370 24 $354 -- $16 $302 -- $68 90% 2Q2024 $396 35 $364 -- $32 $205 $99 $92 98% 3Q2024 $339 20 $302 $3 $34 $256 $58 $24 97% 4Q2024 $259 19 $252 $5 $2 $227 $32 -- N/A 1Q2025 $198 13 $198 -- -- $198 -- -- N/A 6 Note: Numbers may not sum due to rounding. Excludes any positions originated, purchased and sold within the same quarter and the assets acquired in the OSI2 Merger.
Financial Highlights As of ($ and number of shares in thousands, except per share amounts) 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 GAAP Net Investment Income per Share $0.54 $0.55 $0.54 $0.52 $0.57 1 Adjusted Net Investment Income per Share $0.54 $0.55 $0.55 $0.56 $0.57 Net Realized and Unrealized Gains (Losses), Net of Taxes per Share -$0.45 -$0.10 -$0.53 -$0.40 -$0.43 1 Adjusted Net Realized and Unrealized Gains (Losses), Net of Taxes per Share -$0.45 -$0.10 -$0.54 -$0.44 -$0.42 Earnings (Loss) per Share $0.09 $0.45 $0.01 $0.12 $0.14 1 Adjusted Earnings (Loss) per Share $0.09 $0.45 $0.01 $0.12 $0.15 Quarterly Distributions per Share $0.40 $0.55 $0.55 $0.55 $0.55 Quarterly Supplemental Distributions per Share $0.07 -- -- -- -- Total Quarterly Distributions per Share $0.47 $0.55 $0.55 $0.55 $0.55 Special Distributions per Share -- -- -- -- $0.07 NAV per Share $17.63 $18.09 $18.19 $18.72 $19.14 Weighted Average Shares Outstanding 82,245 82,245 81,830 79,763 77,840 Shares Outstanding, End of Period 82,245 82,245 82,245 81,396 78,965 Investment Portfolio (at Fair Value) $2,835,294 $3,021,279 $3,121,703 $3,047,445 $3,018,552 Cash and Cash Equivalents $112,913 $63,966 $96,321 $125,031 $112,369 Total Assets $3,083,792 $3,198,341 $3,322,181 $3,297,939 $3,266,195 2 Total Debt Outstanding $1,577,795 $1,638,693 $1,679,164 $1,635,642 $1,622,717 Net Assets $1,449,815 $1,487,811 $1,496,133 $1,524,099 $1,511,651 Total Debt to Equity Ratio 1.11x 1.12x 1.16x 1.10x 1.10x Net Debt to Equity Ratio 1.03x 1.07x 1.10x 1.02x 1.02x 3 Weighted Average Interest Rate on Debt Outstanding 6.2% 6.7% 7.0% 7.0% 7.0% 1. See appendix for a description of the non-GAAP measures as necessary. 2. Net of unamortized financing costs. 7 I n 3. Includes effect of the interest rate swap agreements the Company entered into in connection with the issuance of the 2027 Notes and the 2029 Notes. v e s t o r P r e s e n ta
Portfolio Highlights As of ($ in thousands, at fair value) 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 Investments at Fair Value $2,835,294 $3,021,279 $3,121,703 $3,047,445 $3,018,552 Number of Portfolio Companies 136 144 158 151 146 Average Portfolio Company Debt Investment Size $22,000 $22,000 $19,900 $20,100 $20,200 Asset Class: First Lien 81.8% 81.7% 82.5% 80.8% 77.9% Second Lien 3.0% 3.5% 3.5% 5.4% 8.4% Unsecured Debt 3.9% 3.6% 3.8% 2.6% 2.5% Equity 4.8% 5.0% 4.2% 4.8% 4.8% Joint Venture Interests 6.5% 6.1% 6.0% 6.4% 6.4% Interest Rate Type for Debt Investments: % Floating-Rate 87.6% 88.4% 85.3% 85.4% 84.3% % Fixed-Rate 12.4% 11.6% 14.7% 14.6% 15.7% Yields: 1 Weighted Average Yield on Debt Investments 10.7% 11.2% 11.9% 12.2% 12.2% Cash Component of Weighted Average Yield on Debt Investments 9.5% 10.0% 10.6% 11.0% 11.1% 2 Weighted Average Yield on Total Portfolio Investments 10.2% 10.7% 11.5% 11.7% 11.7% Note: Numbers may not sum due to rounding. 1. Annual stated yield earned plus net annual amortization of OID or premium earned on accruing investments, including the Company's share of the return on debt investments in the Kemper JV and Glick JV, and excluding any amortization or accretion of interest income resulting solely from the cost basis established by ASC 805 for the assets acquired in connection with the mergers of Oaktree Strategic Income Corporation (the “OCSI Merger”) and the OSI2 Merger. See appendix for a description of the non-GAAP financial measures. 2. Annual stated yield earned plus net annual amortization of OID or premium earned on accruing investments and dividend income, including the Company's share of the return on debt investments in the Kemper JV and Glick JV, and excluding any amortization or accretion of interest income resulting solely from the cost basis established by ASC 805 for the assets acquired in connection with the OCSI Merger and the OSI2 8 Merger. See appendix for a description of the non-GAAP financial measures.
Investment Activity As of ($ in thousands) 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 New Investment Commitments $198,100 $259,000 $338,700 $395,600 $370,300 1 New Funded Investment Activity $201,300 $232,700 $293,200 $377,400 $367,600 Proceeds from Prepayments, Exits, Other Paydowns and Sales $352,400 $338,300 $185,500 $322,600 $213,500 2 Net New Investments -$151,100 -$105,600 $107,700 $54,800 $154,100 New Investment Commitments in New Portfolio Companies 5 9 11 20 14 New Investment Commitments in Existing Portfolio Companies 8 10 9 15 10 Portfolio Company Exits 13 23 3 15 10 Weighted Average Yield at Cost on New Debt Investment 9.6% 9.9% 11.1% 11.1% 11.6% Commitments 1. New funded investment activity includes drawdowns on existing revolver commitments. 9 2. Net new investments consists of new funded investment activity less proceeds from prepayments, exits, other paydowns and sales. I n v e s t o r P r e s e n ta
Net Asset Value Per Share Bridge $21.00 Adjusted Net Realized and Unrealized Adjusted NII Gains (Losses), Net of Taxes $0.54 -$0.45 $20.00 $19.00 $0.01 $0.41 -$0.55 -$0.04 -$0.00 $0.54 $18.00 $17.00 $18.09 $16.00 $17.63 $15.00 $14.00 9/30/24 NAV GAAP Net Interest Income Net Unrealized Net Realized Net Realized & Quarterly 12/31/24 NAV 1 Investment Accretion Appreciation / Gain / (Loss) Unrealized Loss Distribution 1 Income Related to (Depreciation) Related to Merger Merger Accounting Accounting Adjustments Adjustments Note: Numbers may not sum due to rounding. Net asset value per share amounts are based on the shares outstanding at each respective quarter end. Net investment income per share, net unrealized appreciation / (depreciation), and net realized gain / (loss) are based on the weighted average number of shares outstanding for the period. Numbers may not sum due to rounding. See appendix for a description of the non-GAAP measures. 10 1. Excludes reclassifications of net unrealized appreciation / (depreciation) to net realized gains / (losses) as a result of investments exited during the quarter. I n v e s t o r P r e s e n a t
Capital Structure Overview Funding Sources Facility 12/31/24 0.90x to 1.25x ($ in millions) Size Outstanding Interest Rate Maturity Target Leverage Ratio Secured Credit Facilities Syndicated Facility $1,218 $430 SOFR + 2.00% Jun-28 Citibank Facility $400 $230 SOFR + 2.35% Jan-29 Secured Debt Subtotal $1,618 $660 Investment Unsecured Debt Grade Rated 2025 Notes $300 $300 3.50% Feb-25 By Moody’s And Fitch 1 2027 Notes $350 $350 Jan-27 2.70% (SOFR + 1.658%) 1 2029 Notes $300 $300 Feb-29 7.10% (SOFR + 3.126%) Unsecured Debt Subtotal $950 $950 Total Debt $2,568 $1,610 59% Unsecured Borrowings Maturities ($ in millions) $1,500 Unsecured Debt Credit Facilities Drawn $1.1bn $1,000 Credit Facilities Undrawn 2 $788 Available Liquidity $170 $500 $230 $430 $350 $300 $300 $0 2025 2026 2027 2028 2029 Diverse and flexible sources of debt capital with ample liquidity As of December 31, 2024 Note: Numbers may not sum due to rounding. 1. The Company entered into an interest rate swap agreement under which the Company receives a fixed interest rate and pays a floating rate based on three-month SOFR plus a spread. 2. Liquidity was composed of $113 million of unrestricted cash and cash equivalents and $958 million of undrawn capacity under the credit facilities (subject to borrowing base and other limitations). 11
Funding and Liquidity Metrics Leverage Utilization Liquidity Overview ($ in millions) ($ in millions) 3/31/24 6/30/24 9/30/24 12/31/24 $3,000 Credit Facilities Committed $1,618 $1,618 $1,618 $1,618 $2,568 $2,568 $2,568 $2,568 Credit Facilities Drawn -$730 -$790 -$710 -$660 $2,500 Cash and Equivalents $125 $96 $64 $113 $828 $888 $908 $958 $2,000 Total Liquidity $1,013 $924 $971 $1,071 1 -$209 -$264 -$284 -$275 Unfunded Commitments $1,500 Unavailable Unfunded $30 $45 $37 $32 2 Commitments 2 $1,000 $1,740 Adjusted Liquidity $834 $705 $724 $827 $1,680 $1,660 $1,610 $500 $0 3/31/24 6/30/24 9/30/24 12/31/2024 3 Ample liquidity to support funding needs Total Debt Outstanding Undrawn Capacity ($ in millions) 3/31/24 6/30/24 9/30/24 12/31/24 Cash and Equivalents $125 $96 $64 $113 Net Assets $1,524 $1,496 $1,488 $1,450 Total Leverage 1.10x 1.11x 1.12x 1.11x Net Leverage 1.02x 1.05x 1.07x 1.03x Note: Numbers may not sum due to rounding, 1. Excludes unfunded commitments to the Kemper JV and Glick JV. 2. Includes unfunded commitments ineligible to be drawn due to certain limitations in credit agreements. 3. As of December 31, 2024, we have analyzed cash and cash equivalents, availability under our credit facilities, the ability to rotate out of certain assets and amounts of unfunded commitments that could be drawn and 12 believe our liquidity and capital resources are sufficient to invest in market opportunities as they arise.
Strategic Joint Ventures are Accretive to Earnings OCSL’s JVs are income-enhancing vehicles that primarily invest in senior secured loans of middle market companies and other corporate debt securities Key Attributes: • Equity ownership: 87.5% OCSL and 12.5% joint venture partner • Shared voting control: 50% OCSL and 50% joint venture partner Kemper JV Characteristics Glick JV Characteristics (At fair value) (At fair value) $135mm 4.8% $50mm 1.7% OCSL’s Investments % of OCSL’s OCSL’s Investments % of OCSL’s in the Kemper JV Portfolio in the Glick JV Portfolio $4.0mm 11.8% $1.5mm 12.4% Net Investment Return on OCSL’s Net Investment Return on OCSL’s 1 2 3 2 Income Investment (Annualized) Income Investment (Annualized) Combined Portfolio Summary Portfolio Company Wtd. Avg. Debt Portfolio Investment Portfolio First Lien Leverage Ratio Count Yield $417mm 97% 44 9.4% 1.2x As of December 31, 2024 1. Represents OCSL’s 87.5% share of the Kemper JV’s net investment income (excluding subordinated note interest expense) earned during the quarter ended December 31, 2024. 2. Calculated as OCSL’s share of each respective joint venture’s net investment income anmberalized, divided by the fair value of OCSL’s investments in each joint venture as of September 30, 2024. 13 3. Represents OCSL’s 87.5% share of the Glick JV’s net investment income (excluding subordinated note interest expense) earned during the quarter ended December 31, 2024.
Appendix
Quarterly Statement of Operations For the three months ended ($ in thousands) 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 Investment income Interest income $78,422 $83,626 $85,953 $85,256 $91,414 PIK interest income $5,728 $6,018 $6,149 $4,816 $3,849 Fee income $1,679 $3,897 $1,460 $2,546 $1,307 Dividend income $818 $1,144 $1,404 $1,411 $1,415 GAAP total investment income $86,647 $94,685 $94,966 $94,029 $97,985 Interest income amortization related to merger accounting $423 $315 $607 $3,311 $29 adjustments Adjusted total investment income $87,070 $95,000 $95,573 $97,340 $98,014 Expenses Base management fee $8,144 $8,550 $11,781 $11,604 $11,477 Part I incentive fee $7,913 $8,943 $8,341 $8,452 $9,028 Part II incentive fee -- -- -- -- -- Interest expense $30,562 $32,058 $32,513 $31,881 $32,170 1 Other operating expenses $2,590 $2,191 $2,466 $2,225 $2,621 Total expenses $49,209 $51,742 $55,101 $54,162 $55,296 Fees waived -$750 -$750 -$1,500 -$1,500 -$1,500 Part I incentive fees waived -$6,377 -$1,228 -$3,210 -- -- Net expenses $42,082 $49,764 $50,391 $52,662 $53,796 (Provision) benefit for taxes on net investment income (263) -- -- -- -- GAAP net investment income $44,302 $44,921 $44,575 $41,367 $44,189 Less: Interest income accretion related to merger accounting $423 $315 $607 $3,311 $29 adjustments Add: Part II incentive fee -- -- -- -- -- Adjusted net investment income $44,725 $45,236 $45,182 $44,678 $44,218 Note: See appendix for a description of the non-GAAP measures. 15 1. Includes professional fees, directors fees, administrator expense and general and administrative expenses. I n v e s t o r P r e s e n a t
Quarterly Statement of Operations (continued) For the three months ended ($ in thousands, except per share amounts) 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 Net realized and unrealized gains (losses) Net unrealized appreciation (depreciation) -$19,614 $43,179 $26,199 -$25,252 -$25,025 Net realized gains (losses) -$17,310 -$51,848 -$69,452 -$6,603 -$8,453 (Provision) benefit for taxes on realized and unrealized gains (losses) -$139 $661 -$202 -$175 -$176 GAAP net realized and unrealized gains (losses), net of taxes -$37,063 -$8,008 -$43,455 -$32,030 -$33,654 Net realized and unrealized losses (gains) related to merger accounting -$61 -$314 -$600 -$3,314 $796 adjustments Adjusted net realized and unrealized gains (losses), net of taxes -$37,124 -$8,322 -$44,055 -$35,344 -$32,858 GAAP net increase (decrease) in net assets resulting from operations $7,239 $36,913 $1,120 $9,337 $10,535 Interest income amortization (accretion) related to merger accounting adjustments $423 $315 $607 $3,311 $29 Net realized and unrealized losses (gains) related to merger accounting -$61 -$314 -$600 -$3,314 $796 adjustments Adjusted earnings (loss) $7,601 $36,914 $1,127 $9,334 $11,360 Per share data: GAAP total investment income $1.05 $1.15 $1.16 $1.18 $1.26 Adjusted total investment income $1.06 $1.16 $1.17 $1.22 $1.26 GAAP net investment income $0.54 $0.55 $0.54 $0.52 $0.57 Adjusted net investment income $0.54 $0.55 $0.55 $0.56 $0.57 GAAP net realized and unrealized gains (losses), net of taxes -$0.45 -$0.10 -$0.53 -$0.40 -$0.43 Adjusted net realized and unrealized gains (losses), net of taxes -$0.45 -$0.10 -$0.54 -$0.44 -$0.42 GAAP net increase/decrease in net assets resulting from operations $0.09 $0.45 $0.01 $0.12 $0.14 Adjusted earnings (loss) $0.09 $0.45 $0.01 $0.12 $0.15 Weighted average common shares outstanding 82,245 82,245 81,830 79,763 77,840 Shares outstanding, end of period 82,245 82,245 82,245 81,396 78,965 16 I n v e s t o r P r e s e n a t
Non-GAAP Disclosures 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 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 accretion 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 under its second amended and restated investment advisory agreement (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/gain resulting from the Mergers and used by management to evaluate the economic earnings of its investment portfolio. Moreover, these metrics align the Company's key financial measures with the calculation of incentive fees payable to Oaktree 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 Oaktree absent such exclusion). 17 I n v e s t o r P r e s e n a t
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