LOS ANGELES, CA, May 08, 2019 (GLOBE NEWSWIRE) -- Oaktree Strategic Income Corporation (NASDAQ: OCSI) (“Oaktree Strategic Income” or the “Company”), a specialty finance company, today announced its unaudited financial results for the fiscal quarter ended March 31, 2019.

Financial Highlights for the Quarter Ended March 31, 2019

  • Total investment income of $12.5 million ($0.42 per share), up from $11.3 million ($0.38 per share) for the first fiscal quarter of 2019, primarily reflecting a larger average portfolio.

  • Net investment income of $5.2 million ($0.18 per share), up from $4.9 million ($0.17 per share) for the first fiscal quarter of 2019, primarily due to higher interest income.

  • Net asset value per share of $9.74, up from $9.43 for the first fiscal quarter of 2019, driven by unrealized appreciation in certain debt instruments.

  • Originated $64.4 million of new investment commitments and received $38.9 million of proceeds from prepayments, exits, other paydowns and sales.

  • A quarterly distribution was declared of $0.155 per share, payable on June 28, 2019 to stockholders of record on June 14, 2019.

Edgar Lee, Chief Executive Officer and Chief Investment Officer, said, “The second quarter was highlighted by NAV appreciation and strong sequential earnings growth. OCSI delivered $0.18 of net investment income per share, an increase of $0.02 over the same quarter a year ago, reflecting our efforts to prudently grow the portfolio. The rebound in the liquid credit markets led to a NAV increase of over 3 percent during the quarter, as credit quality remains excellent, and we continue to defensively position OCSI’s portfolio by taking a highly selective, late-cycle approach to investing.”

Distribution Declaration

The Board of Directors declared a quarterly distribution of $0.155 per share, payable on June 28, 2019 to stockholders of record on June 14, 2019.

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
  March 31, 2019 December 31, 2018 March 31, 2018
Operating results:      
Interest income $12,294,014  $11,203,567  $9,121,457 
PIK interest income 6,004  7,745  782,055 
Fee income 181,806  47,635  651,259 
Total investment income 12,481,824  11,258,947  10,554,771 
Net expenses 7,265,064  6,395,410  5,965,424 
Net investment income 5,216,760  4,863,537  4,589,347 
Net realized and unrealized gains (losses) 8,478,667  (18,064,228) 4,093,292 
Net increase (decrease) in net assets resulting from operations $13,695,427  $(13,200,691) $8,682,639 
Net investment income per common share $0.18  $0.17  $0.16 
Net realized and unrealized gains (losses) per common share $0.28  $(0.62) $0.13 
Earnings (loss) per common share — basic and diluted $0.46  $(0.45) $0.29 


  As of
  March 31, 2019 December 31,
2018
 September 30,
2018
Select balance sheet and other data:      
Investment portfolio at fair value $592,147,418  $553,351,420  $556,841,828 
Total debt outstanding 307,656,800  262,156,800  275,056,800 
Net assets 287,105,458  277,977,380  295,745,420 
Net asset value per share 9.74  9.43  10.04 
Total leverage 1.07x  0.94x  0.93x 

Total investment income for the quarter ended March 31, 2019 was $12.5 million, and included $12.3 million of cash interest income from portfolio investments and $0.2 million of fee income. Total investment income was higher as compared to the quarter ended December 31, 2018, primarily due to a larger average portfolio.

Net expenses for the quarter were $7.3 million, a $0.9 million increase from $6.4 million in the prior quarter. The increase was primarily due to a $0.6 million increase in Part I incentive fees (net of waivers) as a result of higher pre-incentive fee net investment income during the quarter and a $0.5 million increase in interest expense as a result of additional borrowings during the quarter, partially offset by a $0.2 million decrease in professional fees and administrator expense.

Net realized and unrealized gains on the investment portfolio for the quarter were $8.5 million, reflecting unrealized appreciation in certain debt investments.

Portfolio and Investment Activity

  As of
($ in thousands) March 31, 2019 December 31,
2018
 March 31, 2018
Investments at fair value $592,147  $553,351  $542,673 
Number of portfolio companies 81  79  65 
Average portfolio company debt size $7,400  $7,100  $8,500 
       
Asset class:      
Senior secured debt 90.5% 90.1% 89.0%
Unsecured debt 9.5% 9.9% 10.7%
Equity % % 0.3%
       
Non-accrual debt investments:      
Non-accrual investments at fair value $  $50  $5,434 
Non-accrual investments as a percentage of debt investments % % 1.0%
Number of investments on non-accrual 1  1  3 
       
Interest rate type:      
Percentage floating-rate 100.0% 100.0% 100.0%
       
Yields:      
Weighted average yield on debt investments (1) 8.0% 7.8% 7.9%
Cash component of weighted average yield on debt investments 7.8% 7.7% 7.7%
Weighted average yield on total portfolio investments (2) 8.0% 7.8% 7.7%
       
Investment activity:      
New investment commitments $64,400  $93,100  $94,300 
New funded investment activity (3) $67,900  $87,000  $94,700 
Proceeds from prepayments, exits, other paydowns and sales $38,900  $73,100  $98,400 
Net new investments (4) $29,000  $13,900  $(3,700)
Number of new investment commitments in new portfolio companies 9  12  11 
Number of new investment commitments in existing portfolio companies 5  7   
Number of portfolio company exits 7  9  13 

 __________

(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 is reflected net of drawdowns on existing revolver commitments. 
(4) Net new investments consists of new funded investment activity less proceeds from prepayments, exits, other paydowns and sales. 

As of March 31, 2019, the fair value of the Company's investment portfolio was $592.1 million and was comprised of investments in 81 companies, including the Company's investments in OCSI Glick JV LLC ("OCSI Glick JV").

At fair value, 90.5% of the Company's portfolio as of March 31, 2019 consisted of senior secured floating-rate debt investments, including 85.4% of first liens and 5.1% of second liens, and 9.5% consisted of a subordinated note investment in the OCSI Glick JV.

As of March 31, 2019, there was one investment on which the Company had stopped accruing cash and/or PIK interest or original issue discount ("OID") income that, in the aggregate, represented 0.13% of the debt portfolio at cost and 0.00% at fair value.

As of March 31, 2019, the OCSI Glick JV had $167.5 million in assets, including senior secured loans to 34 portfolio companies. The joint venture generated income of $1.5 million for Oaktree Strategic Income during the quarter ended March 31, 2019.

Liquidity and Capital Resources

As of March 31, 2019, the Company had $11.8 million of cash and cash equivalents (including restricted cash), total principal value of debt outstanding of $307.7 million, and $147.3 million of undrawn capacity on its credit facilities, subject to borrowing base and other limitations. The weighted average interest rate on debt outstanding was 4.6% as of March 31, 2019.

As of March 31, 2019, the Company’s total leverage ratio was 1.07x debt-to-equity.

Conference Call Information

Oaktree Strategic Income will host a conference call to discuss its second fiscal quarter results at 12:30 p.m. Eastern Time / 9:30 a.m. Pacific Time on May 8, 2019. The conference call may be accessed by dialing (877) 507-4376 (U.S. callers) or +1 (412) 317-5239 (non-U.S. callers), participant password “Oaktree Strategic Income.” During the earnings conference call, Oaktree Strategic Income intends to refer to an investor presentation that will be available on the Investors section of the Oaktree Strategic Income website, www.oaktreestrategicincome.com. Alternatively, a live webcast of the conference call can be accessed on Oaktree Strategic Income’s website.

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 (U.S. callers) or +1 (412) 317-0088 (non-U.S. callers), access code 10130351, beginning approximately one hour after the broadcast.

About Oaktree Strategic Income Corporation

Oaktree Strategic Income Corporation (NASDAQ:OCSI) is a specialty finance company dedicated to providing customized capital solutions for middle-market companies in both the syndicated and private placement markets. The firm seeks to generate a stable source of current income while minimizing the risk of principal loss and, to a lesser extent, capital appreciation by providing innovative first-lien financing solutions to companies across a wide variety of industries. The Company is regulated as a business development company under the Investment Company Act of 1940, as amended. Oaktree Strategic Income is managed by Oaktree Capital Management, L.P. For additional information, please visit Oaktree Strategic Income's website at www.oaktreestrategicincome.com.

Forward-Looking Statements

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. 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 or natural disasters; 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; 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 Securities and Exchange Commission, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

Contacts

Investor Relations:
Oaktree Strategic Income Corporation
Michael Mosticchio
(212) 284-1900
ocsi-ir@oaktreecapital.com

Media Relations:
Financial Profiles, Inc.
Moira Conlon
(310) 478-2700
mediainquiries@oaktreecapital.com


Oaktree Strategic Income Corporation
Consolidated Statements of Assets and Liabilities

 March 31, 2019
(unaudited)
 December 31, 2018
(unaudited)
 September 30,
2018
ASSETS     
Investments at fair value:     
Control investments (cost March 31, 2019: $73,237,461; cost December 31, 2018:
$73,440,352; cost September 30, 2018: $73,501,970)
$56,017,403  $54,535,309  $58,512,170 
Non-control/Non-affiliate investments (cost March 31, 2019: $546,005,001; cost December 31,
2018: $515,681,060; cost September 30, 2018: $499,423,794)
536,130,015  498,816,111  498,329,658 
Total investments at fair value (cost March 31, 2019: $619,242,462; cost December 31,
2018: $589,121,412; cost September 30, 2018: $572,925,764)
592,147,418  553,351,420  556,841,828 
Cash and cash equivalents2,854,506  6,892,598  10,439,023 
Restricted cash8,972,775  8,081,210  5,992,764 
Interest, dividends and fees receivable2,935,766  3,074,356  3,139,334 
Due from portfolio companies52,091  50,826  167,946 
Receivables from unsettled transactions  2,939,282  5,143,533 
Deferred financing costs2,199,665  2,329,897  2,469,675 
Derivative asset at fair value93,702    45,807 
Other assets930,541  1,009,609  891,960 
Total assets$610,186,464  $577,729,198  $585,131,870 
LIABILITIES AND NET ASSETS    
Liabilities:     
Accounts payable, accrued expenses and other liabilities$650,869  $552,712  $649,781 
Base management fee and incentive fee payable1,368,446  1,139,267  1,915,682 
Due to affiliate1,047,888  2,855,707  1,700,952 
Interest payable2,961,560  2,549,429  1,130,735 
Payables from unsettled transactions9,395,443  30,419,142  8,932,500 
Derivative liability at fair value  28,761   
Director fees payable  50,000   
Credit facilities payable307,656,800  262,156,800  275,056,800 
Total liabilities323,081,006  299,751,818  289,386,450 
Commitments and contingencies     
Net assets:     
Common stock, $0.01 par value, 150,000,000 shares authorized; 29,466,768 shares issued
and outstanding as of March 31, 2019, December 31, 2018 and September 30, 2018
294,668  294,668  294,668 
Additional paid-in-capital370,751,389  370,751,389  370,751,389 
Accumulated overdistributed earnings(83,940,599) (93,068,677) (75,300,637)
Total net assets (equivalent to $9.74, $9.43 and 10.04 per common share as of March 31,
2019, December 31, 2018 and September 30, 2018, respectively)
287,105,458  277,977,380  295,745,420 
Total liabilities and net assets$610,186,464  $577,729,198  $585,131,870 


Oaktree Strategic Income Corporation

Consolidated Statements of Operations
(unaudited)

  Three months ended
March 31, 2019
 Three months ended
December 31, 2018
 Three months ended
March 31, 2018
 Six months ended
March 31, 2019
 Six months ended
March 31, 2018
Interest income:          
Control investments $1,472,785  $1,485,423  $768,550  $2,958,208  $1,967,247 
Non-control/Non-affiliate investments 10,769,097  9,651,149  8,290,028  20,420,246  17,054,503 
Interest on cash and cash equivalents 52,132  66,995  62,879  119,127  133,974 
Total interest income 12,294,014  11,203,567  9,121,457  23,497,581  19,155,724 
PIK interest income:          
Control investments     774,562    1,069,713 
Non-control/Non-affiliate investments 6,004  7,745  7,493  13,749  10,756 
Total PIK interest income 6,004  7,745  782,055  13,749  1,080,469 
Fee income:          
Non-control/Non-affiliate investments 181,806  47,635  651,259  229,441  1,049,308 
Total fee income 181,806  47,635  651,259  229,441  1,049,308 
Total investment income 12,481,824  11,258,947  10,554,771  23,740,771  21,285,501 
Expenses:          
Base management fee 1,451,393  1,414,767  1,393,458  2,866,160  2,805,630 
Part I incentive fee 1,096,144  854,378  480,384  1,950,522  740,106 
Professional fees 375,601  458,612  745,110  834,213  1,765,293 
Directors fees 105,278  105,000  130,000  210,278  260,000 
Interest expense 3,771,530  3,222,954  2,898,165  6,994,484  5,662,642 
Administrator expense 231,033  434,867  281,931  665,900  561,615 
General and administrative expenses 283,338  332,226  276,568  615,564  711,778 
Total expenses 7,314,317  6,822,804  6,205,616  14,137,121  12,507,064 
Fees waived (49,253) (427,394) (240,192) (476,647) (357,685)
Net expenses 7,265,064  6,395,410  5,965,424  13,660,474  12,149,379 
Net investment income 5,216,760  4,863,537  4,589,347  10,080,297  9,136,122 
Unrealized appreciation (depreciation):          
Control investments 1,684,985  (3,915,243) (59,931) (2,230,258) (781,106)
Affiliate investments     134,093    210,009 
Non-control/Non-affiliate investments 6,989,963  (15,770,813) 3,045,873  (8,780,850) 5,433,031 
Foreign currency forward contract 122,463  (74,568)   47,895   
Net unrealized appreciation (depreciation) 8,797,411  (19,760,624) 3,120,035  (10,963,213) 4,861,934 
Realized gains (losses):          
Affiliate investments         28 
Non-control/Non-affiliate investments (77,774) 1,447,306  973,257  1,369,532  (3,409,477)
Foreign currency forward contract (240,970) 249,090    8,120   
Net realized gains (losses) (318,744) 1,696,396  973,257  1,377,652  (3,409,449)
Net realized and unrealized gains (losses) 8,478,667  (18,064,228) 4,093,292  (9,585,561) 1,452,485 
Net increase (decrease) in net assets resulting from operations $13,695,427  $(13,200,691) $8,682,639  $494,736  $10,588,607 
Net investment income per common share — basic and diluted $0.18  $0.17  $0.16  $0.34  $0.31 
Earnings (loss) per common share — basic and diluted $0.46  $(0.45) $0.29  $0.02  $0.36 
Weighted average common shares outstanding — basic and diluted 29,466,768  29,466,768  29,466,768  29,466,768  29,466,768