Financial Highlights for the Quarter Ended
- Total investment income was
$10.3 million( $0.35per share) for the second fiscal quarter of 2020, down from $11.6 million( $0.39per share) for the first fiscal quarter of 2020, primarily as a result of lower interest income due to the Company's debt investment in OCSI Glick JV LLC("OCSI Glick JV") being placed on non-accrual status as of March 31, 2020.
- Net investment income was
$4.6 million( $0.15per share) for the second fiscal quarter of 2020, as compared with $4.7 million( $0.16per share) for the first fiscal quarter of 2020, primarily as a result of lower investment income, mostly offset by lower incentive fees as a result of the investment adviser's permanent waiver of Part I incentive fees for the quarter.
- Net asset value ("NAV") per share was
$7.17as of March 31, 2020, down 26% from $9.71as of December 31, 2019. The decrease in NAV was primarily due to increased market volatility and wider credit spreads resulting from the COVID-19 pandemic. The decline in the fair value of the investment portfolio was primarily unrealized and concentrated in liquid senior secured loans, which experienced sharp price declines in March.
$93.9 millionof new investment commitments and received $83.8 millionof proceeds from prepayments, exits, other paydowns and sales during the quarter ended March 31, 2020. Of these new investment commitments, 100% were first lien loans.
- Total debt outstanding was
$327.2 millionas of March 31, 2020. The total debt to equity ratio was 1.55x, and the net debt to equity ratio was 1.44x, after adjusting for cash and cash equivalents.
- Liquidity as of
March 31, 2020was composed of $21.9 millionof unrestricted cash and cash equivalents and $77.8 millionof undrawn capacity on its credit facilities (subject to borrowing base and other limitations). Unfunded investment commitments were $19.6 million, or $5.6 millionwhen excluding unfunded commitments to the OCSI Glick JV.
- Investment adviser permanently waived all incentive fees for the quarter ended
March 31, 2020.
- A quarterly cash distribution was declared of
$0.125per share, payable on June 30, 2020to stockholders of record on June 15, 2020.
The Board of Directors declared a quarterly distribution of
Distributions are paid primarily from distributable (taxable) income. To the extent taxable earnings for a fiscal taxable year fall below the total amount of distributions for that fiscal year, a portion of those distributions may be deemed a return of capital to the Company’s stockholders.
Results of Operations
|For the three months ended|
|PIK interest income||296,894||3,563||6,004|
|Total investment income||10,342,613||11,603,113||12,481,824|
|Net investment income||4,561,775||4,727,580||5,216,760|
|Net realized and unrealized gains (losses)||(74,777,439||)||1,406,674||8,478,667|
|Net increase (decrease) in net assets resulting from operations||$||(70,215,664||)||$||6,134,254||$||13,695,427|
|Net investment income per common share||$||0.15||$||0.16||$||0.18|
|Net realized and unrealized gains (losses) per common share||$||(2.53||)||$||0.05||$||0.28|
|Earnings (loss) per common share — basic and diluted||$||(2.38||)||$||0.21||$||0.46|
|Select balance sheet and other data:|
|Cash and cash equivalents||$||21,931,375||$||9,525,141||$||5,646,899|
|Investment portfolio at fair value||524,379,311||584,453,747||597,104,447|
|Total debt outstanding||327,156,800||306,156,800||294,656,800|
|Net asset value per share||7.17||9.71||9.65|
|Total debt to equity ratio||1.55x||1.07x||1.04x|
|Net debt to equity ratio||1.44x||1.04x||1.02x|
Total investment income for the quarter ended
Net expenses for the quarter totaled
Net realized and unrealized losses on the investment portfolio for the quarter were
1 Includes Level 2 and Level 3 debt securities that are valued based on broker quotations, as well as the Company's investment in OCSI Glick JV, as its underlying investment portfolio is primarily composed of liquid debt investments.
Portfolio and Investment Activity
|($ in thousands)||March 31, 2020 (unaudited)||December 31, 2019 (unaudited)||March 31, 2019 (unaudited)|
|Investments at fair value||$||524,379||$||584,454||$||592,147|
|Number of portfolio companies||88||84||81|
|Average portfolio company debt size||$||6,000||$||7,100||$||7,400|
|Senior secured debt||92.8||%||90.7||%||90.5||%|
|OCSI Glick JV||7.2||%||9.3||%||9.5||%|
|Non-accrual debt investments:|
|Non-accrual investments at fair value||$||37.8||$||—||$||—|
|Non-accrual investments as a percentage of debt investments||7.2||%||—||%||—||%|
|Number of investments on non-accrual||1||—||1|
|Interest rate type:|
|Weighted average yield on debt investments1||6.0||%||7.2||%||8.0||%|
|Cash component of weighted average yield on debt investments||5.5||%||7.0||%||7.8||%|
|Weighted average yield on total portfolio investments2||6.0||%||7.2||%||8.0||%|
|New investment commitments||$||93,900||$||34,900||$||64,400|
|New funded investment activity3||$||101,300||$||37,900||$||67,900|
|Proceeds from prepayments, exits, other paydowns and sales||$||83,800||$||46,000||$||38,900|
|Net new investments4||$||17,500||$||(8,100||)||$||29,000|
|Number of new investment commitments in new portfolio companies||18||9||9|
|Number of new investment commitments in existing portfolio companies||9||2||5|
|Number of portfolio company exits||14||9||7|
|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 and dividend income, including the Company's share of the return on debt investments in the OCSI Glick JV.
|3 New funded investment activity includes drawdowns on existing revolver commitments.
|4 Net new investments consists of new funded investment activity less proceeds from prepayments, exits, other paydowns and sales.
The Company's investments in the OCSI Glick JV totaled
During the quarter ended
Liquidity and Capital Resources
The Company’s total debt to equity ratio was 1.55x and 1.07x as of
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 (
Some of the statements in this press release constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements may include statements as to: our future operating results and distribution projections; our business prospects and the prospects of our portfolio companies; and the impact of the investments that we 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. 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 and our quarterly reports on Form 10-Q. Other factors that could cause actual results to differ materially include: changes in the economy, financial markets and political environment; risks associated with possible disruption in our operations or the economy generally due to terrorism, natural disasters or the COVID-19 pandemic; future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities) and conditions in our operating areas, particularly with respect to business development companies or regulated investment companies; general considerations associated with the COVID-19 pandemic; and other considerations that may be 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
Consolidated Statements of Assets and Liabilities
|Investments at fair value:|
|Control investments (cost
|Non-control/Non-affiliate investments (cost
|Total investments at fair value (cost
|Cash and cash equivalents||21,931,375||9,525,141||5,646,899|
|Interest, dividends and fees receivable||1,489,472||3,031,841||3,813,730|
|Due from portfolio companies||539,587||806,914||350,597|
|Receivables from unsettled transactions||28,775,575||4,105,042||5,091,671|
|Deferred financing costs||2,308,557||1,923,373||2,139,299|
|Derivative asset at fair value||316,967||—||20,876|
|Accounts payable, accrued expenses and other liabilities||$||1,569,469||$||932,315||$||901,410|
|Base management fee and incentive fee payable||1,442,121||1,255,344||1,368,431|
|Due to affiliate||1,041,237||1,404,411||1,457,007|
|Payables from unsettled transactions||44,817,245||14,653,671||37,724,473|
|Derivative liability at fair value||—||168,712||—|
|Director fees payable||—||—||25,000|
|Credit facilities payable||327,156,800||306,156,800||294,656,800|
|Commitments and contingencies|
|Accumulated overdistributed earnings||(158,260,102||)||(83,477,090||)||(85,043,994||)|
|Total net assets (equivalent to
|Total liabilities and net assets||$||589,793,512||$||613,133,907||$||623,333,714|
Consolidated Statements of Operations
|Three months ended
||Three months ended
||Three months ended
||Six months ended
||Six months ended
|Interest on cash and cash equivalents||27,597||30,710||52,132||58,307||119,127|
|Total interest income||9,665,605||11,211,885||12,294,014||20,877,490||23,497,581|
|PIK interest income:|
|Total PIK interest income||296,894||3,563||6,004||300,457||13,749|
|Total fee income||380,114||387,665||181,806||767,779||229,441|
|Total investment income||10,342,613||11,603,113||12,481,824||21,945,726||23,740,771|
|Base management fee||1,442,121||1,505,526||1,451,393||2,947,647||2,866,160|
|Part I incentive fee||271,520||992,138||1,096,144||1,263,658||1,950,522|
|General and administrative expenses||264,391||273,479||283,338||537,870||615,564|
|Net investment income||4,561,775||4,727,580||5,216,760||9,289,355||10,080,297|
|Unrealized appreciation (depreciation):|
|Foreign currency forward contract||485,679||(189,588||)||122,463||296,091||47,895|
|Net unrealized appreciation (depreciation)||(67,418,332||)||1,926,384||8,797,411||(65,491,948||)||(10,963,213||)|
|Realized gains (losses):|
|Foreign currency forward contract||(24,959||)||(242,485||)||(240,970||)||(267,444||)||8,120|
|Net realized gains (losses)||(7,359,107||)||(519,710||)||(318,744||)||(7,878,817||)||1,377,652|
|Net realized and unrealized gains (losses)||(74,777,439||)||1,406,674||8,478,667||(73,370,765||)||(9,585,561||)|
|Net increase (decrease) in net assets resulting from operations||$||(70,215,664||)||$||6,134,254||$||13,695,427||$||(64,081,410||)||$||494,736|
|Net investment income per common share — basic and diluted||$||0.15||$||0.16||$||0.18||$||0.32||$||0.34|
|Earnings (loss) per common share — basic and diluted||$||(2.38||)||$||0.21||$||0.46||$||(2.17||)||$||0.02|
|Weighted average common shares outstanding — basic and diluted||29,466,768||29,466,768||29,466,768||29,466,768||29,466,768|
Source: Oaktree Strategic Income Corporation