Oaktree Specialty Lending Corporation

Welcome and thank you for joining Oak Tree Specialty Lending Corporation's third fiscal quarter 2026 conference call. Today's conference call has been recorded. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I'll now turn the call to Alison Murmy, OCSL's Head of Investor Relations. Please go ahead.

Thank you, operator. Our third quarter 2026 earnings release, which we issued this morning, along with the accompanying slide presentation, can be accessed on the investor 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 statements. Please refer to the relevant SEC filing for a discussion of these factors in further detail. Oaktree undertakes 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 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. On today's call, Matt Pendo, President of OCSL, will begin with a progress report on objectives we set out for fiscal 2026 and an overview of our third quarter results. Armen Panossian, our CEO and co-chief investment officer, will then provide a market update. Raghav Khanna, our co-chief investment officer, will 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. Now, I'll turn the call over to Matt Pendo, President of OCML. Matt.

Thank you, Alison, and good morning, everyone. With three quarters of fiscal 2026 complete, we want to assess our progress against two of our primary objectives. First, reducing non-accruals through exits and monetization events, and second, maintaining a flexible balance sheet. Starting with the first objective, reducing non-accruals. As of June 30, 2026, non-accruals were approximately 1.8% of the total debt portfolio at fair value, down 80 basis points sequentially, and down 140 basis points year over year. In the last two quarters alone, we exited five non-accrual positions, leaving six investments on non-accrual. More than 85% of the decline in non-accrual dollars over the past year is due to proceeds received and investments returning to accrual status. The most significant portfolio development this quarter was Thrasio. Through a series of asset sales, Thrasio repaid approximately $25 million or a little over 80% of our loans, including paying off the entire first out-term loan and about 75% of the second out-term loan. The remaining second out position was returned to accrual status and we expect it to be repaid in the next few months. Raghav will discuss Thrasio in more detail in his remarks. Turning to the second objective, maintaining a flexible balance sheet, we ended the quarter with net leverage of approximately 1.02 times compared to 1.04 times at the end of March and below the midpoint of our 0.9 times to 1.25 times target range. Available liquidity was nearly $700 million at quarter end of about $30 million from last quarter. We believe this combination of conservative leverage and ample liquidity positions us well to invest into an evolving private credit market. Furthermore, we plan to address the $350 million of unsecured notes that mature in January 2027 over the next several quarters. Turning to our third fiscal quarter financial highlights, adjusted net investment income was $32.2 million, or approximately $0.37 per share. down slightly from $33.7 million or 38 cents per share in the prior quarter. This slight decrease primarily reflected our lower use of leverage, the lighter than average quarter of non-recurring income, and the payment of a partial income-based incentive fee, which Chris will walk through in more detail. For the quarter, our board declared a total cash dividend of 33 cents per share. The dividend is composed of a base cash dividend of 30 cents per share and a supplemental dividend of 3 cents per share. This is consistent with our policy of paying a supplemental dividend equal to 50% of adjusted net investment income in excess of the base dividend. The dividends are payable in cash on September 30, 2026. The stock goes a record on September 15, 2026. With that, I'll turn the call over to Armen to discuss the market environment. Thank you, Matt.