Oaktree Specialty Lending Corporation (OCSL) functions as a business development company (BDC), dedicated to providing capital solutions for middle-market businesses. Its investment ...
Oaktree Specialty Lending Corporation, traded on the NASDAQ Global Select Market under the symbol OCSL, is a closed-end, externally managed, non-diversified business development company regulated under the Investment Company Act of 1940. The company was formed in late 2007 and is externally managed by Oaktree Fund Advisors, LLC, part of ...Oaktree Specialty Lending Corporation, traded on the NASDAQ Global Select Market under the symbol OCSL, is a closed-end, externally managed, non-diversified business development company regulated under the Investment Company Act of 1940. The company was formed in late 2007 and is externally managed by Oaktree Fund Advisors, LLC, part of Oaktree, a global alternative investment manager known for its credit-investing platform and emphasis on risk control, consistency, and downside protection. Armen Panossian serves as OCSL’s Chief Executive Officer and co-Chief Investment Officer.
OCSL’s core business is supplying customized financing to small and middle-market companies that may have limited access to public bond markets, syndicated loans, or traditional bank financing. Its investment capabilities include interim bridge loans, first-lien and second-lien secured loans, senior and junior debt, unsecured loans, hybrid mezzanine instruments, preferred equity, and other structured capital solutions. The company commonly structures investments as integrated one-stop facilities, first-lien loans, or second-lien loans, sometimes accompanied by an equity co-investment. Its objective is often to act as a lead investor and provide flexible capital for corporate expansion, acquisitions sponsored by private equity firms, recapitalizations, refinancing, and management buyouts.
OCSL generally targets North American businesses with enterprise values of approximately $20 million to $150 million and EBITDA of about $3 million to $50 million. Typical individual investments range from $5 million to $75 million, while the platform can originate and underwrite transactions of up to approximately $100 million. The portfolio may span education, business services, retail and consumer products, healthcare, manufacturing, food and restaurants, construction and engineering, and media and advertising. This industry diversification is intended to reduce concentration risk while allowing the manager to apply sector-specific underwriting expertise.
As a BDC, OCSL’s economic model centers on earning interest and fee income from its investment portfolio, with returns influenced by base rates, credit spreads, leverage, portfolio performance, and the cost of borrowed capital. The company distributes a substantial portion of its income to shareholders through dividends, making income generation a central investment consideration. The supplied trailing data reports approximately $1.14 billion in market capitalization, a dividend per share of $1.54, a dividend yield near 11.9%, a price-to-book ratio of approximately 0.83, and debt-to-equity of roughly 1.04. These figures are market-data snapshots and can change over time. Key risks include borrower defaults, declines in portfolio valuations, interest-rate movements, leverage, liquidity constraints, regulatory requirements, and dependence on Oaktree’s management and origination capabilities.
YoYYoY means Year-over-Year. It compares the latest annual value with the previous annual value to show long-term trend strength.
QoQQoQ means Quarter-over-Quarter. It compares the latest quarter with the immediately previous quarter to show short-term momentum changes.
RevenueThe total money that came through the front door from selling things, before paying a single bill. Think of it as the grand total of every credit card swipe from customers. (YoY compares this year to last year's performance, while QoQ compares the current three months to the previous three).
$299.7M
+60.9%
+8.6%
Net IncomeThe absolute bottom line. If the company paid every single supplier, employee, banker, and tax collector, this is the actual money left in their pocket at the end of the day.
$33.9M
-41.4%
+263.8%
Gross MarginThe basic markup. If they sell a $100 pair of sneakers, this percentage tells you how much of that price tag is profit right after paying for the rubber and shoelaces, but before paying for things like store rent or TV commercials.
+87.2%
+181.9%
-29.5%
Operating MarginThe 'day job' efficiency score. Out of every dollar a customer spends, this shows how many cents the company keeps after making the product AND paying for all the everyday corporate overhead (like salaries, marketing, and keeping the lights on).
+50.4%
+62.4%
+329.2%
Net MarginThe final take-home percentage. When you strip away every conceivable cost, tax, and interest payment, this is the exact number of cents the company truly gets to keep from every dollar in sales.
+11.3%
-63.6%
+250.9%
Free Cash FlowThe holy grail of corporate cash. It's the spendable, physical money left over after the business pays for its daily operations AND buys the big, expensive upgrades (like new factories or servers) it needs to survive. This is the 'free' money they can use to pay dividends or buy back stock.
$142.4M
+646.5%
+1506.3%
FCF MarginThe ultimate cash conversion rate. It shows how good the company is at turning regular sales directly into cold, hard, spendable cash. A high percentage means the business is an absolute cash-printing machine.
+47.5%
+363.9%
+1395.4%
Debt / EquityThe financial risk gauge. It compares how much of the company's empire was built using borrowed money (loans) versus the owners' own money (shareholders). A high number means they are heavily leveraged and playing a riskier game; a low number means they are playing it safe.
101.4%
-7.9%
-3.0%
Current RatioThe 12-month survival check. It simply compares the cash they have right now (plus things they can quickly turn into cash) against the immediate bills they absolutely must pay this year. A score above 1 means they have enough in the wallet to cover the upcoming bills without panicking.
11.20x
+21.3%
+1440.2%
Total AssetsThe absolute size of the company's empire. It bundles together absolutely everything of value they own—from the cash in the register and the inventory in the warehouse, to the software patents in the vault and the factories on the ground.
Operator: Welcome and thank you for joining Oaktree Specialty Lending Corporation's Third Fiscal Quarter 2026 Conference Call. Today's conference call has been recorded. I'll now turn the call to Alison Mermey, OCSL's Head of Investor Relations. Please go ahead.
Alison Friedman Mermey: 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 filings 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 Oaktree 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 McKown, 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 OCSL. Matt.
Mathew Pendo: Thank you, Alison, and good morning, everyone. With 3 quarters of fiscal 2026 complete, we want to assess our progress against 2 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 2 quarters alone, we exited 5 non-accrual positions, leaving 6 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 …
