Oaktree Specialty Lending Corporation

Welcome, and thank you for joining Oak Tree Specialty Lending Corporation's first fiscal quarter conference call. Today's conference call is being recorded. At this time, all participants are in listen-only mode, but will be prompted for a question and answer session following the prepared remarks. Now, I would like to introduce Dane Clevin, Head of Investor Relations, who will host today's conference call. Mr. Clevin, you may begin.

Thank you, Operator, and thank you all for joining our call. We appreciate your support of Oak Tree Specialty Lending Corporation. This morning, we issued our earnings release and accompanying slide presentation, which can be accessed on the investor section of our website at oaktreespecialtylending.com. We encourage investors, the media, and others to review the information posted on our website. Joining us on the call today are Armin Panossian, Chief Executive Officer and Co-Chief Investment Officer, Raghav Khanna, Co-Chief Investment Officer, Matt Pendo, President, and Chris McCown, Chief Financial Officer and Treasurer. Before we begin, I want to remind you that comments on today's call include forward-looking statements reflecting our current views with respect to our future operating results and financial performance. Our actual results could differ materially from those implied or expressed in the forward-looking statements. Please refer to our SEC filings for discussion of these factors in further detail. We undertake no duty to update or revise any forward-looking statements. I'd also like to remind you that nothing on this call constitutes an offer to sell or a solicitation of an offer to purchase any interest of an Oak Tree fund. Before we turn to our results, I want to address the recent fires and the impact they've had on our community. We're heartbroken by the devastation caused by the fires in Los Angeles, Oak Tree's headquarters, and our home since our founding in 1995. In response to these tragic events, we've deployed a variety of resources to ensure the safety and well-being of our employees and Oak Tree will continue to support the long and challenging road to recovery for them, as well as the broader Los Angeles community. Despite these challenging circumstances, we've kept our operations running without interruption, allowing us to continue to serving our clients. With that, I would like to now turn the call over to Matt to discuss our results.

Thanks, Dane. Welcome, everyone, and thank you for joining us today. I want to begin the call by discussing some of the strategic actions we took this quarter the best position OCSL for future success. First, on February 3rd, Oaktree purchased from OCSL $100 million of newly issued common stock at a price of $17.63 per share, which is equal to OCSL's net asset value as of January 31, 2025. This represents a 10% premium to the stock price and resulted in a nearly 7% increase to NAV. Second, we permanently amended our fee structure instituting a cap, also known as a total return hurdle, in the calculation of our part one incentive fee to consider capital gains and losses. The total return hurdle includes a look back provision that commences effective October 1, 2024, and will build over time to a rolling 12 quarter look back by the company's 2027 fiscal year end. Under the new incentive fee structure, we are waiving $6.2 million of Part 1 incentive fees this quarter. Third, we amended our dividend policy to include a base dividend and a supplemental dividend. For the upcoming quarter, our Board declared a base dividend of $0.40 per share plus a supplemental dividend of $0.07 per share, which are both payable in cash on March 31, 2025, the stock close of record as of March 17, 2025. We generally expect that the supplemental distributions will be equal to approximately 50 percent of the amount by which adjusted NAI exceeds the base quarterly distribution of 40 cents per share, subject to the Board's approval. Taken together, we believe these actions bring several benefits and position OCSL for future success. The equity raise will help grow our asset base and further diversify the portfolio. 2025 is shaping up to be a more active year than 2024 for deal flow, and the equity capital plus the associated impact of leverage will give us the drive pattern to capitalize on the attractive opportunities within our growing pipeline. Regarding the amended fee structure, although we have voluntarily waived fees over the past three quarters, the new incentive fee structure is permanent, providing the market and shareholders with more clarity. The change to the dividend policy establishes a stable base dividend that we believe is sustainable through market cycles amid fluctuations in rates and spreads. In addition, we expect our approach to the supplemental dividend to help us grow NAB going forward. Turning now to financial results. Adjusted NAI was $45 million, or $0.54 per share, for the fiscal first quarter, down slightly from $0.55 per share in the prior quarter. Our net asset value per share declined to $17.63 from $18.09 last quarter. I'll now turn the call over to Armin to provide more details on our portfolio and the market environment.