Oaktree Specialty Lending Corporation

Welcome and thank you for joining Oak Tree Specialty Lending Corporation's second fiscal quarter 2026 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Today's conference call is being recorded. I'll now turn the call over to Allison Murmey, OCSL's Head of Investor Relations.

Thank you, Operator. Our second quarter 2026 earnings release, which we issued this morning, along with the accompanying slide presentation, can be accessed on the Investors section of our website, oaktreespecialtylending.com. Before we begin, I want to remind you that the comments on today's call include forward-looking statements reflecting current views with respect to, among other things, future operating results and financial performance. Actual results could differ materially from those implied or expressed in the forward-looking statement. Please refer to the relevant SEC filings for discussion of these factors in further detail. Oaktree undertakes no duty to update or revise any forward-looking statement I'd also like to remind you that nothing on this call constitutes an offer to sell or solicitation of an offer to purchase any interest in an Oak Tree Fund. Investors and others should note that OCSL uses the investor section of its corporate website to announce material information. The company encourages investors, the media, and others to review information that it shares on its website. Now, I'll turn the call over to Matt Pendo, President of OCSL. Matt?

Thank you, Allison, and good morning, everyone. I will begin with an overview of our second quarter fiscal 2026 results, after which Armin Pinozian, our CEO and co-chief investment officer, will share his perspective on the market environment. Raghav Khanna, our co-chief investment officer, will then cover portfolio activity, and Chris McCown, our CFO and treasurer, will close with a review of our financial results before we open the call for questions. Despite external noise around private credit and BDCs, our team remained focused on reducing non-accruals and positioning our balance sheet for flexibility. As of March 31, 2026, non-accruals were 2.6% of the total debt portfolio measured at fair value, down from 3.1% last quarter and 4.6% one year ago. As an update post-quarter, In April, we sold two legacy non-accrual positions, Dominion Diagnostics and All Web Leads. We expect to make further progress reducing non-accruals and realizing cash proceeds that we can deploy into performing assets over the coming months. Managing our balance sheet is a high priority as we position OCSL for a more attractive investment environment. During the quarter, we sold a portion of our liquid credit positions at cost a strategic decision to build dry powder, maintain leverage below the midpoint of our target range, and rotate out of lower-yielding public credit. We ended the second quarter with available liquidity of $671 million, up $100 million from last quarter, and net leverage of 1.04 times down from 1.07 times last quarter. Turning to financial highlights. Net asset value per share was $15.69 as of March 31, 2026, compared to $16.30 as of December 31, 2025. The decline was driven primarily by unrealized mark-to-market write-downs of software loans during the quarter. The fair value of our performing software loans declined by approximately 310 basis points, largely consistent with movements in broadly syndicated software loans. Importantly, we believe that these markdowns generally are not indications of deteriorating fundamentals in the underlying portfolio companies, but rather reflecting the repricing of risk in the broader markets. Adjusted net investment income from the quarter was $33.7 million, or 38 cents per share, as compared with $36.1 million, or 41 cents per share, in the prior quarter. The decrease reflected lower reference rates, lower non-recurring income, and ending leverage below the midpoint of our target range. For the quarter, our Board declared a total cash dividend of 34 cents per share. Due to our conservative use of leverage, we have adjusted our base dividend to 30 cents per share while maintaining our supplemental dividend at 50% of excess adjusted net investment income above our base dividend. The dividends are payable on June 30th, 2026. The stock is a record as of June 15th, 2026. With that, I'll turn the call over to Arvind to share his perspective on the market environment and what we see ahead.