tslx-8k_20220503.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): May 3, 2022

 

Sixth Street Specialty Lending, Inc.

(Exact name of registrant as specified in charter)

 

 

 

 

 

 

 

Delaware

 

001-36364

 

27-3380000

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

2100 McKinney Avenue, Suite 1500

Dallas, TX

 

 

 

75201

(Address of Principal Executive Offices)

 

 

 

(zip code)

 

Registrant’s telephone number, including area code: (469) 621-3001

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

TSLX

The New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

 

 

 


 

 

Item 2.02 – Results of Operations and Financial Condition

On May 3, 2022, the registrant issued a press release announcing its financial results for the quarter ended March 31, 2022. The text of the press release is included as Exhibit 99.1 to this Form 8-K.

The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

Item 7.01 – Regulation FD Disclosure

On May 3, 2022, the registrant issued a press release, included herewith as Exhibit 99.1, announcing the declaration of a second quarter 2022 base dividend per share of $0.41 to shareholders of record as of June 15, 2022, payable on July 15, 2022, and a first quarter 2022 supplemental dividend per share of $0.04 to shareholders of record as of May 31, 2022, payable on June 30, 2022.

The information disclosed under this Item 7.01, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, and shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, except as expressly set forth by specific reference in such filing.

Item 9.01 – Financial Statements and Exhibits

(d) Exhibits:

 

 

 

 

Exhibit
Number

  

Description

 

 

99.1

  

Press Release, dated May 3, 2022

 

 


 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

SIXTH STREET SPECIALTY LENDING, INC.

                    (Registrant)

 

 

 

 

Date: May 3, 2022

 

By:

/s/ Ian Simmonds

 

 

 

Ian Simmonds

 

 

 

Chief Financial Officer

 

 

tslx-ex991_121.htm

Exhibit 99.1

 

 

k

first Quarter 2022 Earnings Results

 

Sixth Street Specialty Lending, Inc. Reports First Quarter Adjusted Net Investment Income Per Share of $0.49 and NAV Per Share of $16.88; Declares a Second Quarter Base Dividend Per Share of $0.41 and a First Quarter Supplemental Dividend Per Share of $0.04

NEW YORK—May 3, 2022— Sixth Street Specialty Lending, Inc. (NYSE: TSLX, or the “Company”) today reported adjusted net investment income of $0.49 per share and adjusted net income of $0.56 per share for the first quarter ended March 31, 2022. These results correspond to an annualized return on equity (ROE) on adjusted net investment income and adjusted net income of 11.6% and 13.2%, respectively.

Both adjusted net investment income per share and adjusted net income per share exclude approximately $0.02 per share of capital gains incentive fee expenses that were accrued, but not paid or payable, related to cumulative unrealized capital gains in excess of cumulative net realized capital gains less any cumulative unrealized losses and capital gains incentive fees paid inception-to-date. Including the impact of the accrued capital gains incentive fee expenses, the Company’s net investment income and net income for the quarter ended March 31, 2022, were $35.7 million, or $0.47 per share, and $40.9 million, or $0.54 per share, respectively. The Company’s strong net investment income in the first quarter reflects continued strength of the core earnings power of its portfolio. Net investment income was supported by fee income from portfolio activity, alongside interest and dividend income levels driven by sustained portfolio yields.

Reported net asset value (NAV) per share was $16.88 at March 31, 2022 as compared to $16.84 or a pro forma NAV per share of $16.73 at December 31, 2021 (which accounts for the impact of the $0.11 per share fourth quarter 2021 supplemental dividend). The drivers of this quarter’s NAV per share growth were primarily the continued overearning of the Company’s base quarterly dividend and net realized and unrealized gains related to portfolio-company specific events.

The Company announced that its Board of Directors has declared a second quarter 2022 base dividend of $0.41 per share to shareholders of record as of June 15, 2022, payable on July 15, 2022, and a first quarter supplemental dividend of $0.04 per share to shareholders of record as of May 31, 2022, payable on June 30, 2022. Adjusted for the impact of the supplemental dividend related to this quarter’s earnings, the Company’s Q1 pro forma NAV per share was $16.84.

On April 25, 2022, the Company completed an amendment to its Revolving Credit Facility, which, among other changes, (a) increased the aggregate commitments under the facility from $1.510 billion to $1.585 billion, (b) extended the stated maturity date to April 23, 2027 for $1.510 billion of commitments, (c) removed the minimum borrower net worth and liquidity test financial covenants and (d) updated and modified terms and provisions of the facility to reflect alternative reference rates based on term Secured Overnight Financing Rate for loans denominated in U.S. dollars.

 

 

 

 

Net Investment Income Per Share

Q1 2022 (adjusted):

            $0.49

Q1 2022:

            $0.47

 

Net Income Per Share

Q1 2022 (adjusted):

       $0.56

Q1 2022:

      $0.54

 

Annualized ROE

Q1 2022 (Adj NII):

11.6%

Q1 2022 (Adj NI):

13.2%

Q1 2022 (NII):

11.2%

Q1 2022 (NI):

12.8%

 

NAV

Q1 2022 ($MM):

$1,284.0

Q1 2022 (per share)

$16.88

Q1 2022 (per share, PF):

$16.84

 

Dividends Declared (per share)

Q1 2022 (Base):

$0.41

LTM Q1’22 (Base):

$1.64

LTM Q1’22 (Supp/Special):

$0.74

LTM Q1’22 (Total):

$2.38

 

 

 

1

 


 

 

 

Portfolio and Investment Activity

 

 

 

 

For the quarter ended March 31, 2022, new investment commitments totaled $79.3 million. This compares to $1,389.1 million for the quarter ended December 31, 2021.

For the quarter ended March 31, 2022, the principal amount of new investments funded was $52.8 million in 2 new and 8 upsizes to existing portfolio companies. For this period, the Company had $144.4 million aggregate principal amount in exits and repayments. For the quarter ended December 31, 2021, the principal amount of new investments funded was $656.3 million in 15 new portfolio companies and 4 existing portfolio companies. For that period, the Company had $527.8 million aggregate principal amount in exits and repayments.

As of March 31, 2022 and December 31, 2021, the Company had investments in 69 and 72 portfolio companies, respectively, with an aggregate fair value of $2,451.9 million and $2,521.6 million, respectively. As of March 31, 2022, the average investment size in each portfolio company was $35.5 million based on fair value.

As of March 31, 2022, the Company’s portfolio based on fair value consisted of 91.3% first-lien debt investments, 1.7% second-lien debt investments, 0.6% mezzanine investments, and 6.4% equity and other investments. As of December 31, 2021, the Company’s portfolio based on fair value consisted of 91.2% first-lien debt investments, 1.7% second-lien debt investments, 0.7% mezzanine investments, and 6.4% equity and other investments.

As of March 31, 2022, 99.0% of debt investments based on fair value in the portfolio bore interest at floating rates with 100.0% of these subject to LIBOR floors. The Company’s credit facilities also bear interest at floating rates. In connection with the Company’s Convertible Notes and other Notes, which bear interest at fixed rates, the Company has entered into fixed-to-floating interest rate swaps in order to align the nature of the interest rates of its liabilities with its investment portfolio.

As of March 31, 2022 and December 31, 2021, the weighted average total yield of debt and income-producing securities at fair value (which includes interest income and amortization of fees and discounts) was 10.1% and 10.0%, respectively, and the weighted average total yield of debt and income-producing securities at amortized cost (which includes interest income and amortization of fees and discounts) was 10.3% and 10.2% for the quarter ended March 31, 2022 and December 31, 2021, respectively.

As of March 31, 2022, less than 0.01% of the portfolio at fair value was on non-accrual status. No new portfolio companies were added to non-accrual during the quarter.

 

 

1.

Calculation includes income earning debt investments only.

 

Origination Activity

Commitments:

$79.3MM

Fundings:

$52.8MM

Net Fundings/(Payoffs):

($91.6)MM

 

 

Average Investment Size

$35.5MM
(1.4% of the portfolio at fair value)

 

 

First Lien Debt Investments (% FV)

91.3%

 

Secured Debt Investments (% FV)

93.1%

 

 

Floating Rate Debt Investments1

(% FV)

99.0%

 

Weighted Average Yield of Debt and Incoming-Producing Securities

Yield at Fair Value:

10.1%

Yield at Amortized Cost:

10.3%

 

 

 

 

 

 

 

 

 

2

 


 

 

 

Results of Operations for the Three Months Ended march 31, 2022

 

 

Total Investment Income

 

For the three months ended March 31, 2022 and 2021, investment income was $67.4 million and $66.2 million, respectively. The increase was due to a slight increase in the average size of our portfolio compared to Q1 2021.

 

Net Expenses

 

Net expenses totaled $31.4 million and $33.4 million for the three months ended March 31, 2022 and 2021, respectively. The decrease in expenses was primarily driven by lower accrued capital gains incentive fees related to cumulative unrealized capital gains in excess of cumulative net realized capital gains less cumulative unrealized losses and capital gains incentive fees paid inception-to-date.

 

Debt and Capital Resources

 

As of March 31, 2022, the Company had $23.5 million in cash and cash equivalents (including $19.1 million of restricted cash), total principal value of debt outstanding of $1,174.8 million, and $1,232.7 million of undrawn capacity on its revolving credit facility, subject to borrowing base and other limitations. The Company’s weighted average interest rate on debt outstanding was 2.3% and 2.2% for the three-month periods ended March 31, 2022 and December 31, 2021, respectively. At March 31, 2022, the Company’s debt to equity ratio was 0.91x, compared to 0.95x at December 31, 2021. Average debt to equity was 0.95x for the three-month period ended March 31, 2022, compared to 0.99x for the three-month period ended December 31, 2021.

 

1.

Daily average debt outstanding during the quarter divided by the daily average net assets during the quarter. Daily average net assets is calculated by starting with the prior quarter end net asset value and adjusting for capital activity during the quarter (adding common stock offerings / DRIP contributions).

Total Investment Income

$67.4MM

 

 

 

Net Expenses

$31.4MM

 

 

 

 

 

Total Principal Debt Outstanding

$1,174.8MM

 

Debt-to-Equity Ratio

Q1 2022 Quarter End:

0.91x

Q1 2022 Average1:

0.95x

 

 

 

 

 

 

3

 


 

 

 

LIQUIDITY AND FUNDING PROFILE

 

Liquidity

The following tables summarize the Company’s liquidity at March 31, 2022 and changes to unfunded commitments since December 31, 2021.

 

$ Millions

Revolving Credit Facility1

 

Unfunded Commitment Activity

Revolver Capacity

$1,585

 

Unfunded Commitments (See Note 8 in 12/31/21 10-K)

$332

Drawn on Revolver

($277)

 

Extinguished Unfunded Commitments

($19)

Unrestricted Cash Balance

$4

 

New Unfunded Commitments

$28

Total Liquidity (Pre-Unfunded Commitments)

$1,312

 

Net Drawdown of Unfunded Commitments

($27)

Available Unfunded Commitments2

($147)

 

Total Unfunded Commitments

$314

Total Liquidity (Burdened for Unfunded Commitments)

$1,165

 

Unavailable Unfunded Commitments2

($167)

 

 

 

Available Unfunded Commitments2

$147

1.

Adjusted to reflect the April 2022 amendment to the revolving credit facility, which upsized the facility by $75 million to $1.585 billion and extended the maturity date to April 2027 for $1.510 billion of commitments

2.

Commitments may be subject to limitations on borrowings set forth in the agreements between the Company and the applicable portfolio company. As a result, portfolio companies may not be eligible to borrow the full commitment amount on such date

Note: May not sum due to rounding

 

Funding Profile

At March 31, 2022, the Company’s funding mix was comprised of 76% unsecured and 24% secured debt. As illustrated below, the Company’s nearest debt maturity is in August 2022 at $100 million, and the weighted average remaining life of investments funded with debt was ~2.1 years, compared to a weighted average remaining maturity on debt of ~4.1 years*.

*Adjusted to reflect the April 2022 amendment to the revolving credit facility, which upsized by $75 million to $1.585 billion and extended the maturity date to April 23, 2027 for $1.510 billion of commitments

**Includes $25 million of non-extending commitments with a maturity of January 31, 2025 and a revolving period ending January 31, 2024 and $50 million of non-extending commitments with a maturity of February 4, 2026 and a revolving period ending February 4, 2025

1.

Net of Deferred Financing Costs and Interest Rate Fair Value Hedging. Deferred Financing Costs total $23.7M at 3/31/21, $22.3M at 6/30/21, $20.8M at 9/30/21, $19.1M at 12/31/21 and $17.8M at 3/31/22. Fair value hedge on interest rate swaps related to the 2024 and 2026 notes total $2.2M at 3/31/21, $4.5M at 6/30/21, $2.5M at 9/30/21, ($5.9M) at 12/31/21 and ($33.0M) at 3/31/22

2.

Weighted by amortized cost of debt investments. Investments are financed by debt and equity capital.  This analysis assumes longer-dated investments are currently funded by equity capital (54% of investments) and the remaining (shorter-dated) investments (46% of investments) are currently funded by debt financing. Investments for purposes of this analysis exclude unfunded commitments, and equity capital is defined as 3/31/22 net assets

3.

Weighted by gross commitment amount

Note: Numbers may not sum due to rounding

4

 


 

 

Conference Call and Webcast

 

Conference Call Information:

A conference call to discuss the Company’s financial results will be held live at 8:30 a.m. Eastern Time on May 4, 2022. Please visit TSLX’s webcast link located on the Events & Presentations page of the Investor Resources section of TSLX’s website http://www.sixthstreetspecialtylending.com for a slide presentation that complements the Earnings Conference Call. Please visit the website to test your connection before the webcast.

Participants are also invited to access the conference call by dialing one of the following numbers:

Domestic: (877) 359-9508

International: +1 (253) 237-1122

Conference ID: 9175546

All callers will need to enter the Conference ID followed by the # sign and reference “Sixth Street Specialty Lending” once connected with the operator. All callers are asked to dial in 10-15 minutes prior to the call so that name and company information can be collected.

 

Replay Information:

An archived replay will be available from approximately 12:00 p.m. Eastern Time on May 4 through May 11 via a webcast link located on the Investor Resources section of TSLX’s website, and via the dial-in numbers listed below:

Domestic: (855) 859-2056

International: +1 (404) 537-3406

Conference ID: 9175546

5

 


 

 

Financial Highlights

 

(Amounts in millions, except per share amounts)

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

March 31, 2021

 

Investments at Fair Value

 

$

 

2,451.9

 

 

$

 

2,521.6

 

 

$

 

2,382.7

 

Total Assets

 

$

 

2,491.2

 

 

$

 

2,551.9

 

 

$

 

2,417.9

 

Net Asset Value Per Share

 

$

 

16.88

 

 

$

 

16.84

 

 

$

 

16.47

 

Supplemental Dividend Per Share

 

$

 

0.04

 

 

$

 

0.11

 

 

$

 

0.06

 

Pro Forma Net Asset Value Per Share (1)

 

$

 

16.84

 

 

$

 

16.73

 

 

$

 

16.41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Income

 

$

 

67.4

 

 

$

 

78.3

 

 

$

 

66.2

 

Adjusted Net Investment Income (2)

 

$

 

37.1

 

 

$

 

46.2

 

 

$

 

36.8

 

Adjusted Net Income (2)

 

$

 

42.3

 

 

$

 

41.8

 

 

$

 

61.2

 

Accrued Capital Gains Incentive Fee Expense

 

$

 

1.4

 

 

$

 

(0.0

)

 

$

 

4.5

 

Net Investment Income

 

$

 

35.7

 

 

$

 

46.2

 

 

$

 

32.3

 

Net Income (Loss)

 

$

 

40.9

 

 

$

 

41.8

 

 

$

 

56.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Net Investment Income Per Share (2)

 

$

 

0.49

 

 

$

 

0.63

 

 

$

 

0.53

 

Adjusted Net Income (Loss) Per Share (2)

 

$

 

0.56

 

 

$

0.57

 

 

$

 

0.88

 

Accrued Capital Gains Incentive Fee Expense Per Share

 

$

 

0.02

 

 

$

 

(0.0

)

 

$

 

0.07

 

Net Investment Income Per Share

 

$

0.47

 

 

$

0.63

 

 

$

 

0.46

 

Net Income (Loss) Per Share

 

$

 

0.54

 

 

$

0.57

 

 

$

 

0.81

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annualized Return on Equity (Adjusted Net Investment Income) (2)(3)

 

 

 

11.6

%

 

 

 

14.6

%

 

 

 

13.3

%

Annualized Return on Equity (Adjusted Net Income (Loss)) (2)(3)

 

 

 

13.2

%

 

 

 

13.2

%

 

 

 

22.1

%

Annualized Return on Equity (Net Investment Income) (3)

 

 

 

11.2

%

 

 

 

14.6

%

 

 

 

11.7

%

Annualized Return on Equity (Net Income (Loss)) (3)

 

 

 

12.8

%

 

 

 

13.2

%

 

 

 

20.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Yield of Debt and Income Producing Securities at Fair Value

 

 

 

10.1

%

 

 

 

10.0

%

 

 

 

9.8

%

Weighted Average Yield of Debt and Income Producing Securities at Amortized Cost

 

 

 

10.3

%

 

 

 

10.2

%

 

 

 

10.1

%

Percentage of Debt Investment Commitments at Floating Rates (4)

 

 

 

99.0

%

 

 

 

98.9

%

 

 

 

99.0

%

 

 

1.

Pro forma net asset value per share gives effect to the supplemental dividend declared related to earnings or special dividend in the applicable period.

 

2.

Adjusted to exclude the capital gains incentive fee that was accrued, but not paid, related to cumulative unrealized capital gains in excess of cumulative net realized capital gains less any cumulative unrealized losses and capital gains incentive fees paid inception to date.

 

3.

Return on equity is calculated using prior period’s ending net asset value per share.

 

4.

Includes one or more fixed rate investments for which the Company entered into an interest rate swap agreement to swap to floating rate. Calculation includes income earning debt investments only.

6

 


 

 

Financial Statements and Tables

 

Sixth Street Specialty Lending, Inc.
Consolidated Balance Sheets

(Amounts in thousands, except share and per share amounts)

(Unaudited)

 

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

 

 

Investments at fair value

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments (amortized cost of $2,301,668 and $2,354,984, respectively)

 

$

2,375,860

 

 

$

2,434,797

 

Non-controlled, affiliated investments (amortized cost of $0 and $12,666, respectively)

 

 

 

 

 

27,017

 

Controlled, affiliated investments (amortized cost of $64,362 and $64,362, respectively)

 

 

75,999

 

 

 

59,779

 

Total investments at fair value (amortized cost of $2,366,030 and $2,432,012, respectively)

 

 

2,451,859

 

 

 

2,521,593

 

Cash and cash equivalents (restricted cash of $19,069 and $14,399, respectively)

 

 

23,494

 

 

 

15,967

 

Interest receivable

 

 

11,674

 

 

 

10,775

 

Prepaid expenses and other assets

 

 

4,148

 

 

 

3,522

 

Total Assets

 

$

2,491,175

 

 

$

2,551,857

 

Liabilities

 

 

 

 

 

 

 

 

Debt (net of deferred financing costs of $17,755 and $19,147, respectively)

 

$

1,121,190

 

 

$

1,185,964

 

Management fees payable to affiliate

 

 

9,330

 

 

 

9,380

 

Incentive fees on net investment income payable to affiliate

 

 

7,877

 

 

 

9,789

 

Incentive fees on net capital gains accrued to affiliate

 

 

16,351

 

 

 

14,928

 

Dividends payable

 

 

31,162

 

 

 

30,926

 

Other payables to affiliate

 

 

2,943

 

 

 

3,149

 

Other liabilities

 

 

18,337

 

 

 

21,873

 

Total Liabilities

 

 

1,207,190

 

 

 

1,276,009

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

 

Net Assets

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value; 100,000,000 shares authorized; no shares

   issued and outstanding

 

 

 

 

 

 

Common stock, $0.01 par value; 400,000,000 shares authorized, 76,366,724

   and 76,067,586 shares issued, respectively; and 76,070,680 and 75,771,542

   shares outstanding, respectively

 

 

764

 

 

 

761

 

Additional paid-in capital

 

 

1,195,695

 

 

 

1,189,275

 

Treasury stock at cost; 296,044 and 296,044 shares held, respectively

 

 

(4,291

)

 

 

(4,291

)

Distributable earnings

 

 

91,817

 

 

 

90,103

 

Total Net Assets

 

 

1,283,985

 

 

 

1,275,848

 

Total Liabilities and Net Assets

 

$

2,491,175

 

 

$

2,551,857

 

Net Asset Value Per Share

 

$

16.88

 

 

$

16.84

 

 

7

 


 

 

 

Sixth Street Specialty Lending, Inc.

Consolidated Statements of Operations

(Amounts in thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31, 2022

 

 

March 31, 2021

 

Income

 

 

 

 

 

 

 

 

Investment income from non-controlled, non-affiliated investments:

 

 

 

 

 

 

 

 

Interest from investments

 

$

64,233

 

 

$

61,765

 

Dividend income

 

 

235

 

 

 

507

 

Other income

 

 

1,762

 

 

 

2,277

 

Total investment income from non-controlled, non-affiliated investments

 

 

66,230

 

 

 

64,549

 

Investment income from non-controlled, affiliated investments:

 

 

 

 

 

 

 

 

Interest from investments

 

 

133

 

 

 

211

 

Dividend income

 

 

 

 

 

545

 

Other income

 

 

 

 

 

 

Total investment income from non-controlled, affiliated investments

 

 

133

 

 

 

756

 

Investment income from controlled, affiliated investments:

 

 

 

 

 

 

 

 

Interest from investments

 

 

1,065

 

 

 

936

 

Other income

 

 

1

 

 

 

1

 

Total investment income from controlled, affiliated investments

 

 

1,066

 

 

 

937

 

Total Investment Income

 

 

67,429

 

 

 

66,242

 

Expenses

 

 

 

 

 

 

 

 

Interest

 

 

9,602

 

 

 

8,953

 

Management fees

 

 

9,330

 

 

 

8,738

 

Incentive fees on net investment income

 

 

7,877

 

 

 

7,811

 

Incentive fees on net capital gains

 

 

1,424

 

 

 

4,515

 

Professional fees

 

 

1,484

 

 

 

1,395

 

Directors’ fees

 

 

191

 

 

 

194

 

Other general and administrative

 

 

1,459

 

 

 

1,866

 

Total expenses

 

 

31,367

 

 

 

33,472

 

Management fees waived (Note 3)

 

 

 

 

 

 

Net Expenses

 

 

31,367

 

 

 

33,472

 

Net Investment Income Before Income Taxes

 

 

36,062

 

 

 

32,770

 

Income taxes, including excise taxes

 

 

350

 

 

 

460

 

Net Investment Income

 

 

35,712

 

 

 

32,310

 

Unrealized and Realized Gains (Losses)

 

 

 

 

 

 

 

 

Net change in unrealized gains (losses):

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

(5,622

)

 

 

9,363

 

Non-controlled, affiliated investments

 

 

(14,350

)

 

 

2,082

 

Controlled, affiliated investments

 

 

16,220

 

 

 

(1

)

Translation of other assets and liabilities in foreign currencies

 

 

(1,800

)

 

 

133

 

Interest rate swaps

 

 

(2,943

)

 

 

(1,822

)

Total net change in unrealized gains (losses)

 

 

(8,495

)

 

 

9,755

 

Realized gains (losses):

 

 

 

 

 

 

 

 

Non-controlled, non-affiliated investments

 

 

8

 

 

 

14,619

 

Non-controlled, affiliated investments

 

 

13,673

 

 

 

(33

)

Foreign currency transactions

 

 

(13

)

 

 

1

 

Total net realized gains (losses)

 

 

13,668

 

 

 

14,587

 

Total Net Unrealized and Realized Gains (Losses)

 

 

5,173

 

 

 

24,342

 

Increase in Net Assets Resulting from Operations

 

$

40,885

 

 

$

56,652

 

Earnings per common share—basic

 

$

0.54

 

 

$

0.81

 

Weighted average shares of common stock outstanding—basic

 

 

75,972,079

 

 

 

69,691,162

 

Earnings per common share—diluted

 

$

0.51

 

 

$

0.75

 

Weighted average shares of common stock outstanding—diluted

 

 

81,536,251

 

 

 

77,356,492

 

8

 


 

 

 

The Company’s investment activity for quarter ended March 31, 2022 and 2021 is presented below (information presented herein is at par value unless otherwise indicated).

 

 

Three Months Ended

 

($ in millions)

 

March 31, 2022

 

 

March 31, 2021

 

New investment commitments:

 

 

 

 

 

 

 

 

Gross originations

 

$

304.5

 

 

$

381.6

 

Less: Syndications/sell downs

 

 

225.2

 

 

 

236.2

 

Total new investment commitments

 

$

79.3

 

 

$

145.4

 

Principal amount of investments funded:

 

 

 

 

 

 

 

 

First-lien

 

$

48.5

 

 

$

129.2

 

Second-lien

 

 

 

 

 

 

Mezzanine

 

 

 

 

 

 

Equity and other

 

 

4.3

 

 

 

1.2

 

Total

 

$

52.8

 

 

$

130.4

 

Principal amount of investments sold or repaid:

 

 

 

 

 

 

 

 

First-lien

 

$

140.5

 

 

$

81.1

 

Second-lien

 

 

 

 

 

 

Mezzanine

 

 

 

 

 

 

Equity and other

 

 

3.9

 

 

 

4.0

 

Total

 

$

144.4

 

 

$

85.1

 

Number of new investment commitments in

   new portfolio companies

 

 

2

 

 

 

2

 

Average new investment commitment amount in

   new portfolio companies

 

$

16.5

 

 

$

36.3

 

Weighted average term for new investment

   commitments in new portfolio companies

   (in years)

 

 

5.7

 

 

 

5.0

 

Percentage of new debt investment commitments

   at floating rates

 

 

100.0

%

 

 

100.0

%

Percentage of new debt investment commitments

   at fixed rates

 

 

 

 

 

 

Weighted average interest rate of new

   investment commitments

 

 

9.5

%

 

 

9.8

%

Weighted average spread over LIBOR of new

   floating rate investment commitments

 

 

8.6

%

 

 

9.6

%

Weighted average interest rate on investments

   fully sold or paid down

 

 

9.7

%

 

 

11.0

%

 

9

 


 

 

 

About Sixth Street Specialty Lending

Sixth Street Specialty Lending is a specialty finance company focused on lending to middle-market companies. The Company seeks to generate current income primarily in U.S.-domiciled middle-market companies through direct originations of senior secured loans and, to a lesser extent, originations of mezzanine loans and investments in corporate bonds and equity securities. The Company has elected to be regulated as a business development company, or a BDC, under the Investment Company Act of 1940 and the rules and regulations promulgated thereunder. The Company is externally managed by Sixth Street Specialty Lending Advisers, LLC, an affiliate of Sixth Street and a Securities and Exchange Commission (“SEC”) registered investment adviser. The Company leverages the deep investment, sector, and operating resources of Sixth Street, a global investment firm with over $60 billion in assets under management and committed capital. For more information, visit the Company’s website at www.sixthstreetspecialtylending.com.

About Sixth Street

Sixth Street is a global investment firm with over $60 billion in assets under management and committed capital. The firm uses its long-term flexible capital, data-enabled capabilities, and One Team culture to develop themes and offer solutions to companies across all stages of growth. Founded in 2009, Sixth Street has more than 350 team members including over 180 investment professionals around the world. For more information, visit www.sixthstreet.com or follow Sixth Street on LinkedIn.

Forward-Looking Statements

Statements included herein may constitute “forward-looking statements,” which relate to future events or the Company’s future performance or financial condition. These statements are not guarantees of future performance, conditions or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in the Company’s filings with the Securities and Exchange Commission. The Company assumes no obligation to update any such forward-looking statements.

 

Investors:

Cami VanHorn, 469-621-2033
Sixth Street Specialty Lending
IRTSLX@sixthstreet.com

 

Media:

Patrick Clifford, 617-793-2004
Sixth Street
PClifford@sixthstreet.com

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