Financial Highlights for the Quarter and Year Ended
- Total investment income was
$9.0 million ($0.30 per share) and$39.5 million ($1.34 per share) for the fourth fiscal quarter and the full fiscal year of 2020, respectively, as compared with$8.6 million ($0.29 per share) and$49.6 million ($1.68 per share) for the third fiscal quarter of 2020 and the full fiscal year of 2019, respectively. The increase in investment income for the quarter was primarily driven by higher yields on new originations and higher make-whole interest income and prepayment fees resulting from the partial paydown of an investment. The decrease in investment income for the full year was primarily due to lower interest income due to lower LIBOR, the Company's debt investment inOCSI Glick JV LLC ("OCSI Glick JV") being on non-accrual status and a smaller average investment portfolio.
- Net investment income was
$3.7 million ($0.13 per share) and$16.2 million ($0.55 per share) for the fourth fiscal quarter and full fiscal year of 2020, respectively, as compared with$3.2 million ($0.11 per share) and$21.1 million ($0.72 per share) for the third fiscal quarter of 2020 and full fiscal year of 2019, respectively. The increase in net investment income was primarily driven by higher investment income and lower interest expense. The decrease in net investment income for the full year was primarily due to lower investment income, partially offset by lower interest expense.
- Net asset value ("NAV") per share was
$9.05 as ofSeptember 30, 2020 , up 7% from$8.47 as ofJune 30, 2020 . The increase in NAV was primarily attributable to unrealized gains resulting from price increases on liquid debt investments and the impact of tighter credit spreads on private debt investment valuations following the improvement in broader credit market conditions. NAV was down 6% from$9.65 as ofSeptember 30, 2019 , primarily due to depreciation of certain debt investments related to increased market volatility resulting from the onset of the COVID-19 pandemic inMarch 2020 .
- Originated
$54.1 million of new investment commitments and received$71.6 million of proceeds from prepayments, exits, other paydowns and sales during the quarter endedSeptember 30, 2020 . Of these new investment commitments, 86.2% were first lien loans and 10.0% were second lien loans. The weighted average yield on new debt investments was 9.5%.
- Total debt outstanding was
$267.6 million as ofSeptember 30, 2020 . The total debt to equity ratio was 1.00x, and the net debt to equity ratio was 0.91x, after adjusting for cash and cash equivalents.
- Liquidity as of
September 30, 2020 was composed of$25.1 million of unrestricted cash and cash equivalents and$83.3 million of undrawn capacity on its credit facilities (subject to borrowing base and other limitations). Unfunded investment commitments were$33.7 million ($19.7 million excluding unfunded commitments to the OCSI Glick JV), with approximately$14.4 million that can be drawn immediately. The remaining$5.3 million is subject to certain milestones that must be met by one of the Company's portfolio companies.
- A quarterly cash distribution was declared of
$0.145 per share, a 16% increase from the prior quarter distribution, payable onDecember 31, 2020 to stockholders of record onDecember 15, 2020 .
Distribution Declaration
The Board of Directors declared a quarterly distribution of
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.
Results of Operations
For the three months ended | For the year ended | |||||||||||||||||||||||||||||||
2020 (unaudited) | 2019 (unaudited) | 2020 | 2019 | |||||||||||||||||||||||||||||
Operating results: | ||||||||||||||||||||||||||||||||
Interest income | $ | 7,730,348 | $ | 7,783,459 | $ | 11,975,868 | $ | 36,391,297 | $ | 48,995,053 | ||||||||||||||||||||||
PIK interest income | 938,550 | 744,122 | 9,633 | 1,983,129 | 26,220 | |||||||||||||||||||||||||||
Fee income | 277,251 | 108,580 | 92,675 | 1,153,610 | 606,197 | |||||||||||||||||||||||||||
Dividend income | 6,008 | — | — | 6,008 | — | |||||||||||||||||||||||||||
Total investment income | 8,952,157 | 8,636,161 | 12,078,176 | 39,534,044 | 49,627,470 | |||||||||||||||||||||||||||
Net expenses | 5,206,521 | 5,467,652 | 6,936,609 | 23,330,544 | 28,487,219 | |||||||||||||||||||||||||||
Net investment income | 3,745,636 | 3,168,509 | 5,141,567 | 16,203,500 | 21,140,251 | |||||||||||||||||||||||||||
Net realized and unrealized gains (losses) | 16,910,056 | 38,990,006 | (2,145,221 | ) | (17,470,703 | ) | (14,166,269 | ) | ||||||||||||||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | 20,655,692 | $ | 42,158,515 | $ | 2,996,346 | $ | (1,267,203 | ) | $ | 6,973,982 | |||||||||||||||||||||
Net investment income per common share | $ | 0.13 | $ | 0.11 | $ | 0.17 | $ | 0.55 | $ | 0.72 | ||||||||||||||||||||||
Net realized and unrealized gains (losses) per common share | $ | 0.57 | $ | 1.32 | $ | (0.07 | ) | $ | (0.59 | ) | $ | (0.48 | ) | |||||||||||||||||||
Earnings (loss) per common share — basic and diluted | $ | 0.70 | $ | 1.43 | $ | 0.10 | $ | (0.04 | ) | $ | 0.24 |
As of | ||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||
Select balance sheet and other data: | ||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 25,072,749 | $ | 30,102,649 | $ | 5,646,899 | ||||||||||||||||||||||||||||||
Investment portfolio at fair value | 502,293,365 | 506,452,244 | 597,104,447 | |||||||||||||||||||||||||||||||||
Total debt outstanding | 267,586,378 | 312,156,800 | 294,656,800 | |||||||||||||||||||||||||||||||||
Net assets | 266,681,411 | 249,709,066 | 284,450,006 | |||||||||||||||||||||||||||||||||
Net asset value per share | 9.05 | 8.47 | 9.65 | |||||||||||||||||||||||||||||||||
Total debt to equity ratio | 1.00 | x | 1.25 | x | 1.04 | x | ||||||||||||||||||||||||||||||
Net debt to equity ratio | 0.91 | x | 1.13 | x | 1.02 | x |
Total investment income for the quarter ended
Total investment income for the year ended
Net expenses for the quarter ended
Net expenses for the year ended
Net investment income for the quarter ended
Net investment income for the year ended
Net realized and unrealized gains on the investment portfolio for the quarter were
Portfolio and Investment Activity
As of | ||||||||||||
($ in thousands) | (unaudited) | (unaudited) | (unaudited) | |||||||||
Investments at fair value | $ | 502,293 | $ | 506,452 | $ | 597,104 | ||||||
Number of portfolio companies | 78 | 76 | 84 | |||||||||
Average portfolio company debt size | $ | 6,600 | $ | 6,700 | $ | 7,200 | ||||||
Asset class: | ||||||||||||
Senior secured debt | 89.7 | % | 90.9 | % | 90.9 | % | ||||||
OCSI Glick JV | 9.8 | % | 9.1 | % | 9.1 | % | ||||||
Equity | 0.5 | % | — | % | — | % | ||||||
Non-accrual debt investments: | ||||||||||||
Non-accrual investments at fair value | $ | 49,910 | $ | 47,874 | $ | — | ||||||
Non-accrual investments as a percentage of debt investments | 9.9 | % | 9.5 | % | — | % | ||||||
Number of investments on non-accrual | 1 | 2 | — | |||||||||
Interest rate type: | ||||||||||||
Percentage floating-rate | 98.1 | % | 98.7 | % | 100.0 | % | ||||||
Percentage fixed-rate | 1.9 | % | 1.3 | % | — | % | ||||||
Yields: | ||||||||||||
Weighted average yield on debt investments1 | 6.3 | % | 5.9 | % | 7.4 | % | ||||||
Weighted average yield on debt investments (excluding the OCSI Glick JV)2 | 7.0 | % | 6.5 | % | 7.3 | % | ||||||
Cash component of weighted average yield on debt investments | 5.3 | % | 5.1 | % | 7.3 | % | ||||||
Weighted average yield on total portfolio investments3 | 6.3 | % | 5.9 | % | 7.4 | % | ||||||
Investment activity: | ||||||||||||
New investment commitments | $ | 54,100 | $ | 41,600 | $ | 50,800 | ||||||
New funded investment activity4 | $ | 51,900 | $ | 34,900 | $ | 51,100 | ||||||
Proceeds from prepayments, exits, other paydowns and sales | $ | 71,600 | $ | 90,700 | $ | 40,200 | ||||||
Net new investments5 | $ | (19,700 | ) | $ | (55,800 | ) | $ | 10,900 | ||||
Number of new investment commitments in new portfolio companies | 9 | 7 | 7 | |||||||||
Number of new investment commitments in existing portfolio companies | 3 | 2 | 1 | |||||||||
Number of portfolio company exits | 6 | 19 | 5 |
__________
1 Annual stated yield earned plus net annual amortization of original issue discount or premium earned on accruing investments, including the Company's share of the return on debt investments in the OCSI Glick JV. |
2 Annual stated yield earned plus net annual amortization of original issue discount or premium earned on accruing investments, excluding the Company's share of the return on debt investments in the OCSI Glick JV. |
3 Annual stated yield earned plus net annual amortization of original issue discount or premium earned on accruing investments and dividend income, including the Company's share of the return on debt investments in the OCSI Glick JV. |
4 New funded investment activity includes drawdowns on existing revolver and delayed draw term loan commitments. |
5 Net new investments consists of new funded investment activity less proceeds from prepayments, exits, other paydowns and sales. |
As of
As of
As of
The Company's investments in the OCSI Glick JV totaled
As of
Liquidity and Capital Resources
As of
As of
As of
The Company’s total debt to equity ratio was 1.00x and 1.25x as of
Recent Developments
Merger Agreement
On
Conference Call Information
For those individuals unable to listen to the live broadcast of the conference call, a replay will be available on Oaktree Strategic Income’s website, or by dialing (877) 344-7529 (
About
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 or the two-step merger of OCSL with and into the Company (the “Mergers”). The forward-looking statements may include statements as to: future operating results of OCSL and the Company and distribution projections; business prospects of OCSL and the Company and the prospects of their portfolio companies; and the impact of the investments that OCSL and the Company expect to make. In addition, words such as “anticipate,” “believe,” “expect,” “seek,” “plan,” “should,” “estimate,” “project” and “intend” indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this press release involve risks and uncertainties. Certain factors could cause actual results and conditions to differ materially from those projected, including the uncertainties associated with (i) the timing or likelihood of the Mergers closing; (ii) the expected synergies and savings associated with the Mergers; (iii) the ability to realize the anticipated benefits of the Mergers, including the expected elimination of certain expenses and costs due to the Mergers; (iv) the percentage of OCSL and the Company’s stockholders voting in favor of the proposals submitted for their approval; (v) the possibility that competing offers or acquisition proposals will be made; (vi) the possibility that any or all of the various conditions to the consummation of the Mergers may not be satisfied or waived; (vii) risks related to diverting management’s attention from ongoing business operations; (viii) the risk that stockholder litigation in connection with the Mergers may result in significant costs of defense and liability; (ix) changes in the economy, financial markets and political environment, (x) risks associated with possible disruption in the operations of OCSL and the Company or the economy generally due to terrorism, natural disasters or the COVID-19 pandemic; (xi) future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities); (xii) conditions in OCSL’s and the Company’s operating areas, particularly with respect to business development companies or regulated investment companies; (xiii) general considerations associated with the COVID-19 pandemic; and (xiv) other considerations that may be disclosed from time to time in OCSL’s and the Company’s publicly disseminated documents and filings. OCSL and the Company have based the forward-looking statements included in this press release on information available to them on the date of this press release, and they assume no obligation to update any such forward-looking statements. Although OCSL and the Company 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 they may make directly to you or through reports that OCSL and the Company in the future may file with the
Contacts
Investor Relations:
(212) 284-1900
ocsi-ir@oaktreecapital.com
Media Relations:
(310) 478-2700
mediainquiries@oaktreecapital.com
Consolidated Statements of Assets and Liabilities
(unaudited) | 2019 | ||||||||||
ASSETS | |||||||||||
Investments at fair value: | |||||||||||
Control investments (cost | $ | 49,409,901 | $ | 45,959,183 | $ | 54,326,418 | |||||
Non-control/Non-affiliate investments (cost | 452,883,464 | 460,493,061 | 542,778,029 | ||||||||
Total investments at fair value (cost | 502,293,365 | 506,452,244 | 597,104,447 | ||||||||
Cash and cash equivalents | 25,072,749 | 30,102,649 | 5,646,899 | ||||||||
Restricted cash | 4,427,678 | 7,792,996 | 8,404,733 | ||||||||
Interest, dividends and fees receivable | 1,273,014 | 1,940,633 | 3,813,730 | ||||||||
Due from portfolio companies | 527,064 | 556,404 | 350,597 | ||||||||
Receivables from unsettled transactions | 7,966,668 | 29,207,404 | 5,091,671 | ||||||||
Deferred financing costs | 2,130,020 | 2,010,442 | 2,139,299 | ||||||||
Deferred offering costs | 121,310 | 101,846 | — | ||||||||
Derivative asset at fair value | — | 281,117 | 20,876 | ||||||||
Other assets | 557,776 | 879,067 | 761,462 | ||||||||
Total assets | $ | 544,369,644 | $ | 579,324,802 | $ | 623,333,714 | |||||
LIABILITIES AND | |||||||||||
Liabilities: | |||||||||||
Accounts payable, accrued expenses and other liabilities | $ | 1,401,709 | $ | 1,312,049 | $ | 901,410 | |||||
Base management fee and incentive fee payable | 1,663,660 | 1,641,920 | 1,368,431 | ||||||||
Due to affiliate | 1,165,838 | 1,136,158 | 1,457,007 | ||||||||
Interest payable | 1,486,077 | 1,983,791 | 2,750,587 | ||||||||
Payables from unsettled transactions | 4,254,635 | 11,385,018 | 37,724,473 | ||||||||
Derivative liability at fair value | 129,936 | — | — | ||||||||
Director fees payable | — | — | 25,000 | ||||||||
Credit facilities payable | 256,656,800 | 312,156,800 | 294,656,800 | ||||||||
Secured borrowings | 10,929,578 | — | — | ||||||||
Total liabilities | 277,688,233 | 329,615,736 | 338,883,708 | ||||||||
Commitments and contingencies | |||||||||||
Net assets: | |||||||||||
Common stock, and outstanding as of | 294,668 | 294,668 | 294,668 | ||||||||
Additional paid-in-capital | 369,199,332 | 369,199,332 | 369,199,332 | ||||||||
Accumulated overdistributed earnings | (102,812,589 | ) | (119,784,934 | ) | (85,043,994 | ) | |||||
Total net assets (equivalent to 2020, | 266,681,411 | 249,709,066 | 284,450,006 | ||||||||
Total liabilities and net assets | $ | 544,369,644 | $ | 579,324,802 | $ | 623,333,714 |
Consolidated Statements of Operations
(unaudited)
Three months ended | Three months ended | Three months ended | Year ended 2020 | Year ended 2019 | ||||||||||||||||
Interest income: | ||||||||||||||||||||
Control investments | $ | — | $ | — | $ | 1,500,837 | $ | 1,436,726 | $ | 5,945,194 | ||||||||||
Non-control/Non-affiliate investments | 7,729,181 | 7,780,962 | 10,443,068 | 34,892,600 | 42,847,646 | |||||||||||||||
Interest on cash and cash equivalents | 1,167 | 2,497 | 31,963 | 61,971 | 202,213 | |||||||||||||||
Total interest income | 7,730,348 | 7,783,459 | 11,975,868 | 36,391,297 | 48,995,053 | |||||||||||||||
PIK interest income: | ||||||||||||||||||||
Non-control/Non-affiliate investments | 938,550 | 744,122 | 9,633 | 1,983,129 | 26,220 | |||||||||||||||
Total PIK interest income | 938,550 | 744,122 | 9,633 | 1,983,129 | 26,220 | |||||||||||||||
Fee income: | ||||||||||||||||||||
Non-control/Non-affiliate investments | 277,251 | 108,580 | 92,675 | 1,153,610 | 606,197 | |||||||||||||||
Total fee income | 277,251 | 108,580 | 92,675 | 1,153,610 | 606,197 | |||||||||||||||
Dividend income: | ||||||||||||||||||||
Non-control/Non-affiliate investments | 6,008 | — | — | 6,008 | — | |||||||||||||||
Total dividend income | 6,008 | — | — | 6,008 | — | |||||||||||||||
Total investment income | 8,952,157 | 8,636,161 | 12,078,176 | 39,534,044 | 49,627,470 | |||||||||||||||
Expenses: | ||||||||||||||||||||
Base management fee | 1,320,373 | 1,374,962 | 1,511,365 | 5,642,982 | 5,875,236 | |||||||||||||||
Part I incentive fee | 343,265 | 266,935 | 1,048,786 | 1,873,858 | 4,293,999 | |||||||||||||||
Professional fees | 436,064 | 243,949 | 303,380 | 1,316,387 | 1,534,958 | |||||||||||||||
Directors fees | 105,000 | 105,000 | 105,000 | 420,000 | 420,278 | |||||||||||||||
Interest expense | 2,532,597 | 2,995,323 | 3,673,356 | 12,431,910 | 14,528,318 | |||||||||||||||
Administrator expense | 214,695 | 217,964 | 231,756 | 911,612 | 1,121,984 | |||||||||||||||
General and administrative expenses | 254,527 | 263,519 | 260,501 | 1,055,916 | 1,201,721 | |||||||||||||||
Total expenses | 5,206,521 | 5,467,652 | 7,134,144 | 23,652,665 | 28,976,494 | |||||||||||||||
Fees waived | — | — | (197,535 | ) | (322,121 | ) | (489,275 | ) | ||||||||||||
Net expenses | 5,206,521 | 5,467,652 | 6,936,609 | 23,330,544 | 28,487,219 | |||||||||||||||
Net investment income | 3,745,636 | 3,168,509 | 5,141,567 | 16,203,500 | 21,140,251 | |||||||||||||||
Unrealized appreciation (depreciation): | ||||||||||||||||||||
Control investments | 4,450,718 | 8,125,254 | (1,287,873 | ) | (3,884,155 | ) | (3,873,446 | ) | ||||||||||||
Non-control/Non-affiliate investments | 12,365,551 | 33,839,061 | 1,106,013 | (3,123,300 | ) | (9,806,905 | ) | |||||||||||||
Foreign currency forward contract | (411,053 | ) | (35,850 | ) | 33,508 | (150,812 | ) | (24,931 | ) | |||||||||||
Net unrealized appreciation (depreciation) | 16,405,216 | 41,928,465 | (148,352 | ) | (7,158,267 | ) | (13,705,282 | ) | ||||||||||||
Realized gains (losses): | ||||||||||||||||||||
Non-control/Non-affiliate investments | 223,723 | (2,938,459 | ) | (2,187,603 | ) | (10,326,109 | ) | (943,588 | ) | |||||||||||
Foreign currency forward contract | 281,117 | — | 190,734 | 13,673 | 482,601 | |||||||||||||||
Net realized gains (losses) | 504,840 | (2,938,459 | ) | (1,996,869 | ) | (10,312,436 | ) | (460,987 | ) | |||||||||||
Net realized and unrealized gains (losses) | 16,910,056 | 38,990,006 | (2,145,221 | ) | (17,470,703 | ) | (14,166,269 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | 20,655,692 | $ | 42,158,515 | $ | 2,996,346 | $ | (1,267,203 | ) | $ | 6,973,982 | |||||||||
Net investment income per common share — basic and diluted | $ | 0.13 | $ | 0.11 | $ | 0.17 | $ | 0.55 | $ | 0.72 | ||||||||||
Earnings (loss) per common share — basic and diluted | $ | 0.70 | $ | 1.43 | $ | 0.10 | $ | (0.04 | ) | $ | 0.24 | |||||||||
Weighted average common shares outstanding — basic and diluted | 29,466,768 | 29,466,768 | 29,466,768 | 29,466,768 | 29,466,768 |
Source:
2020 GlobeNewswire, Inc., source