Oaktree Specialty Lending (OCSL) Q1 2026 earnings summary

Executive summary

• Adjusted net investment income for Q1 2026 was $36.1M ($0.41/share), with GAAP NII at $36.7M ($0.42/share), both up sequentially, fully covering the $0.40/share dividend.

• Portfolio at fair value grew to $2.95B across 167 companies, with $314M in new funded investments and $316.6M in new commitments.

• NAV per share declined to $16.30 from $16.64, mainly due to unrealized depreciation, notably in Pluralsight.

• Non-accruals were stable sequentially and down year-over-year, representing 3.1% of the debt portfolio at fair value (6.5% at cost).

• Declared a quarterly cash distribution of $0.40/share, payable March 31, 2026.

Financial highlights

• Adjusted total investment income was $74.5M, down from $76.9M in the prior quarter, mainly due to lower interest income and OID acceleration.

• Net expenses declined, aided by reduced incentive fees; total expenses decreased by $3.7M year-over-year.

• Net leverage ratio increased to 1.07x, with total debt outstanding at $1.62B.

• Liquidity stood at $576M, including $81M in cash and $495M undrawn on the credit facility.

• Net realized gains were $1.3M, while net unrealized depreciation was $32.4M for the quarter.

Outlook and guidance

• Management remains cautiously optimistic, expecting stable or widening spreads in 2026 and improvement in middle-market M&A activity.

• Focus on maintaining target leverage, ample liquidity, and portfolio diversification amid evolving market conditions.

• Monitoring AI's impact on software and credit markets, with a focus on resilient, high-quality borrowers.