Oaktree Strategic Income Corporation
Oaktree Strategic Income — Q1 2021 Earnings Presentation
33 slides from Oaktree Strategic Income's earnings presentation, Feb 17, 2021
Slide 1: Investor Presentation First Quarter 2021
Investor Presentation First Quarter 2021 Nasdaq: OCSL Filed by Oaktree Specialty Lending Corporation pursuant to Rule 425 under the Securities Act of 1933 and deemed filed under Rule 14a-6(b) of the Securities Exchange Act of 1934 Subject Company: Oaktree Strategic Income Corporation File No. of Rel
Slide 2: Forward Looking Statements & Legal Disclosures
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
Slide 3: Forward Looking Statements & Legal Disclosures (continued)
Forward Looking Statements & Legal Disclosures (continued) 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 Oaktre
Slide 4: Managed by Oaktree: A Leading Global Alternative Asset Manager
Managed by Oaktree: A Leading Global Alternative Asset Manager ($ in billions) Investment Areas (by AUM)3 Founded in 1995, Oaktree is a leading global investment management firm focused on credit investing Assets under management of $148 billion1 in contrarian, value-oriented, risk-controlled invest
Slide 5: The Oaktree Advantage
Trusted partner to financial sponsors and management teams based on long-term commitment and focus on lending across economic cycles The Oaktree Advantage scale track record flexibility relationships An “all weather” portfolio management approach demonstrated across market cycles $148 billion in ass
Slide 6: Experienced Management Team
Experienced Management Team OCSL is supported by Strategic Credit team of over 20 tenured investment professionals located in Los Angeles, New York and London Mel Carlisle, Chief Financial Officer & Treasurer Managing Director, Head of Oaktree’s Distressed Debt and Strategic Credit Fund Accounting G
Slide 7: Oaktree's Investment Philosophy
Oaktree’s Investment Philosophy Emphasis on fundamental credit analysis, consistency and downside protection are key tenets of Oaktree’s investment philosophy, all of which are strongly aligned with the interests of Oaktree Specialty Lending shareholders Primacy of Risk Control Control primarily for
Slide 8: Oaktree's Approach to Direct Lending
Oaktree’s Approach to Direct Lending Focus on proprietary investment opportunities as well as partnering with other lenders as appropriate Leverage the networks and relationships of Oaktree’s over 250 investment professionals Dedicated sourcing professionals are in continuous contact with private eq
Slide 9: Market Environment Dictates Oaktree's View on Optimal Portfolio Positioning
Market Environment Dictates Oaktree’s View on Optimal Portfolio Positioning Credit markets have continued to rally, fueled by improving economic conditions and consumer sentiment, the rollout of Covid-19 vaccines and the likelihood of continued government stimulus measures Middle market loan volumes
Slide 10: Ability to Address a Wide Range of Borrower Needs
Ability to Address a Wide Range of Borrower Needs Extensive, Global Credit Platform to Source Deal Flow Oaktree’s Extensive Origination Capabilities Strong market presence and established relationships with financial sponsors, management teams, capital raising advisors, banks and individual issuers
Slide 11: Oaktree's Credit Investment Process
Oaktree’s Credit Investment Process Source Leverage Oaktree’s global platform: Team of 250+ highly- experienced investment professionals Strong market presence and established relationships with financial sponsors, management teams and capital raising advisers Screen Using Investment Criteria Viabil
Slide 12: Corporate Highlights
Corporate Highlights Provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets Leverage the extensive firm-wide resources and expertise of Oaktree for originations, due diligence, and credit selection Provide complete and flexible capital
Slide 13: Highlights for the Quarter Ended December 31, 2020
Highlights for the Quarter Ended December 31, 2020 Net Asset Value $6.85 per share, up 5% from $6.49 per share as of September 30, 2020 and up 4% from $6.61 per share as of December 31, 2019 Quarterly increase primarily due to unrealized gains on debt investments and gains resulting from the realiza
Slide 14: Update on Pending Merger with OCSI
Update on Pending Merger with OCSI OCSL – OCSI Merger Agreement Summary On October 28, 2020, the Company entered into an agreement to merge with OCSI, an affiliated business development company managed by Oaktree, with the Company as the surviving company Under the terms of the proposed merger, OCSI
Slide 15: Portfolio Summary as of December 31, 2020
Portfolio Summary as of December 31, 2020 (As % of total portfolio at fair value; $ in millions) (As % of total portfolio at fair value) Portfolio Composition Top Ten Industries2,3 Portfolio Characteristics Note:Numbers may not sum due to rounding. 1Excludes negative EBITDA borrowers, investments in
Slide 16: Portfolio Diversity
Portfolio Diversity OCSL’s portfolio is diverse across borrowers and industries (As % of total portfolio at fair value) Portfolio by Industry1 Diversity by Investment Size Top 10 Investments 23% Next 15 Investments 22% Remaining 89 Investments 48% Kemper JV 7% As of December 31, 2020 Note:Numbers ma
Slide 17: Investment Activity
Investment Activity New Investment Highlights (As % of new investment commitments; $ in millions) New Investment Composition ($ in millions) Historical Funded Originations and Exits Note:Numbers rounded to the nearest million or percentage point and may not sum as a result. 1New funded investments i
Slide 18: Investment Activity (continued)
Investment Activity (continued) ($ in millions) New Investment Commitment Detail Security Type Market Quarter Investment Commitments Number of Deals First Lien Second Lien Unsecured & Other Private Placement Primary (Public) Secondary (Public) Avg. Secondary Purchase Price 2Q2020 $273 39 $210 $21 $4
Slide 19: Non-Core Investment Portfolio Detail
8% of Portfolio2 63% of Portfolio2 Note:Numbers may not sum due to rounding. 1Excludes OCSL’s equity investment in First Star Speir Aviation Limited. 2Excludes investments in the Kemper JV. Non-Core Investment Portfolio Detail Non-Core Investment Portfolio Characteristics Private Loans $61 million a
Slide 20: Joint Venture Summary
Joint Venture Summary ($ in millions; at fair value) ($ in millions) OCSL’s Joint Venture with Kemper Corporation Portfolio Summary Cash Flows & Distributions As of December 31, 2020 Note:Numbers may not sum due to rounding. 1Excludes interest paid on the joint venture’s subordinated notes. 2Include
Slide 21: Opportunities to Increase Return on Equity
Opportunities to Increase Return on Equity As of December 31, 2020 1For senior secured loans that have a cost basis above 92.5%. 2Subject to borrowing base and other limitations. We believe OCSL is well-positioned to enhance return on equity 1 Rotate into higher-yielding, proprietary investments Ope
Slide 22: Capital Structure Overview
Capital Structure Overview ($ in millions) (As % of total funding sources) ($ in millions) Funding Sources and Key Highlights Funding Sources by Type Maturity Profile of Liabilities Committed Principal Outstanding Interest Rate Maturity Credit Facility $800 $400 LIBOR+2.00%1 2/25/2024 2025 Notes 300
Slide 23: Funding and Liquidity Metrics
Funding and Liquidity Metrics Leverage Utilization Liquidity Rollforward 1Includes unfunded commitments ineligible to be drawn due to certain limitations in credit agreements. 2As of December 31, 2020, we have analyzed cash and cash equivalents, availability under our credit facility, the ability to
Slide 24: Appendix
OAKTREE OCSL | Specialty Lending Corporation Appendix
Slide 25: Illustrative OCSL-OCSI Merger Consideration
Illustrative OCSL-OCSI Merger Consideration Merger Consideration Highlights Illustrative Example1 OCSI OCSL Combined Total NAV $276.4 $964.9 $1,241.3 Shares Outstanding 29.5 141.0 181.3 NAV Per Share $9.38 $6.85 $6.85 Total merger consideration will be based on the NAVs of OCSL and OCSI determined w
Slide 26: OCSL & OCSI Comparison
OCSL & OCSI Comparison (At fair value, $ in thousands) Portfolio and Balance Sheet Metrics OCSL OCSI Combined Portfolio: Investments at Fair Value $1,712,324 $520,996 $2,233,321 Top 10 Investments1 (%) 23% 23% 20% Number of Portfolio Companies 115 78 143 First Lien (%) 60% 86% 66% Second Lien (%) 25
Slide 27: Portfolio Highlights
Portfolio Highlights ($ in thousands; at fair value) As of 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 Investments at Fair Value $1,712,324 $1,573,851 $1,561,153 $1,392,187 $1,467,627 Number of Portfolio Companies 115 113 119 128 106 Average Portfolio Company Debt Investment Size $16,200 $15
Slide 28: Investment Activity
Investment Activity ($ in thousands) As of 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 New Investment Commitments $286,300 $148,500 $260,500 $272,900 $134,200 New Funded Investment Activity1 $241,500 $146,300 $198,500 $251,700 $136,200 Proceeds from Prepayments, Exits, Other Paydowns and Sal
Slide 29: Financial Highlights
Financial Highlights 1See page 31 for a description of this non-GAAP measure and a reconciliation from net investment income per share to adjusted net investment income per share. 2Net of unamortized financing costs. ($ and number of shares in thousands, except per share amounts) As of 12/31/2020 9/
Slide 30: Net Asset Value Per Share Bridge
Net Asset Value Per Share Bridge Note: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
Slide 31: Historical Statement of Operations
Historical Statement of Operations ($ in thousands, except per share amounts) For the three months ended 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 Interest income $31,633 $37,153 $30,112 $29,898 $28,405 PIK interest income 3,089 2,573 2,183 1,946 1,161 Fee income 3,352 3,571 1,827 2,050 1,
Slide 32: Reconciliation of Adjusted Net Investment Income
Reconciliation of Adjusted Net Investment Income ($ in thousands, except per share amounts) As of 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 GAAP net investment income $10,018 $24,545 $16,770 $22,841 $7,836 Part II incentive fee (net of waivers) 9,540 - - (6,608) 6,251 Adjusted net investme
Slide 33: Contact: Investor Relations
Contact: Michael Mosticchio, Investor Relations [email protected]
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