Sixth Street Specialty Lending (TSLX) Q2 2024 earnings summary

Executive summary

• Q2 2024 net investment income was $0.59 per share ($55.1 million), with annualized ROE of 13.9%; adjusted net investment income was $0.58 per share, annualized ROE of 13.5%.

• Net asset value (NAV) per share reached $17.19 at June 30, 2024, an all-time high, up from $17.04 at year-end 2023.

• Portfolio consisted of 105–109 companies, 92.8% in first-lien debt, 99.6% floating rate, and 1.1% on non-accrual status.

• Board declared a base quarterly dividend of $0.46 per share and a supplemental dividend of $0.06 per share.

• Maintains strong capital and liquidity, with $1.2 billion undrawn revolver capacity and leverage at 1.12x.

Financial highlights

• Total investment income for Q2 2024 was $121.8 million, up from $107.6 million in Q2 2023.

• Net investment income for Q2 2024 was $55.1 million, compared to $48.8 million in Q2 2023.

• Net expenses for Q2 2024 were $65.4–$66.8 million, up due to higher interest, management fees, and meeting costs.

• Weighted average yield on debt and income-producing securities at fair value was 13.8%–13.9%.

• Debt-to-equity ratio was 1.12x at quarter end, down from 1.19x sequentially.

Outlook and guidance

• Annualized adjusted net investment income YTD is $2.32 per share, ROE of 13.7%, within the target range for the full year.

• Management expects net portfolio growth to be flattish in H2 2024, balancing originations and repayments.

• Portfolio yield remains elevated, benefiting from direct originations and higher rates.

• Floating rate portfolio and interest rate floors help hedge against inflation and rate volatility.

• Sufficient liquidity is available for near-term investment and operational needs.