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• Adjusted Net Investment Income per Share: $0.58

• Adjusted Net Income per Share: $0.36

• Net Investment Income per Share: $0.62

• Net Income per Share: $0.39

• Annualized Return on Equity (Adjusted Net Investment Income): 13.5%

• Annualized Return on Equity (Adjusted Net Income): 8.3%

• Quarterly Earnings Power Estimate: $0.50 per share

• Weighted Average Yield at Amortized Cost: 12.3%

• Net Asset Value per Share: $16.98 (adjusted for supplemental dividend)

• Supplemental Dividend: $0.06 per share

• Base Quarterly Dividend: $0.46 per share

• Total Investments: $3.4 billion

• Total Principal Debt Outstanding: $1.9 billion

• Net Assets: $1.6 billion

• Debt-to-Equity Ratio: 1.15 times

• Weighted Average Interest Rate on Debt: 6.4%

• Total Investment Income: $116.3 million

• Interest and Dividend Income: $98.9 million

• Other Fees: $14 million

• Net Expenses: $60.7 million

• Nonaccruals: 1.2% of portfolio at fair value

• Warning! GuruFocus has detected 6 Warning Signs with TSLX.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Sixth Street Specialty Lending Inc (NYSE:TSLX) reported a strong first quarter with adjusted net investment income of $0.58 per share, translating to an annualized return on equity of 13.5%.

• The company declared a base quarterly dividend of $0.46 per share and a supplemental dividend of $0.06 per share, reflecting confidence in its earnings power.

• TSLX's disciplined capital allocation strategy has resulted in portfolio yields that are higher than the sector average, with a weighted average yield at amortized cost of 12.3%.

• The company has significant liquidity and capital capacity, positioning it well to take advantage of attractive investment opportunities in a volatile market environment.

• TSLX maintains a strong credit quality with nonaccruals representing only 1.2% of the portfolio at fair value, and no new investments were added to nonaccrual status in Q1 2025.

Negative Points

• The company experienced a decrease in total investments from $3.5 billion to $3.4 billion due to net repayment activity, indicating a potential challenge in deploying capital.

• TSLX's weighted average yield on debt and income-producing securities decreased slightly quarter-over-quarter, reflecting spread compression and a decline in reference rates.

• The ongoing imbalance in the supply and demand dynamics of the direct lending market, fueled by retail investor-oriented BDCs, has exerted downward pressure on new investment spreads.

• The company faces potential risks from recent tariff announcements, with 2% of its portfolio potentially affected, although the impact is expected to be mild.

• TSLX's cautious approach to capital allocation in a volatile market may limit immediate growth opportunities, as evidenced by the elevated repayment activity and reduced new investment fundings.