Item 2.02 - Results of Operations and Financial Condition
Preliminary Estimates of Results - Liquidity, Earnings, and Portfolio Update as
of and for the quarter ended December 31, 2020
As of January 25, 2021, Sixth Street Specialty Lending, Inc. (the "Company")
estimates that its net asset value per share as of December 31, 2020 was
approximately $17.16 per share, up from $16.87 as of September 30, 2020 (or
$16.77 after adjusting for the impact of the Company's Q3 2020 supplemental
dividend that was paid on December 31, 2020). As of December 31, 2020, the
Company's total portfolio was approximately $2.3 billion in aggregate fair
value, up from $2.1 billion as of September 30, 2020.
Estimated net income per share for the quarter ended December 31, 2020 is $0.79.
Estimated net investment income per share for the quarter ended December 31,
2020 is $0.48. Both these amounts include approximately $0.02 per share of
incentive fee expenses that were accrued, but not paid, related to the Company's
cumulative inception-to-date unrealized gains exceeding its cumulative
inception-to-date realized gains and losses and unrealized losses as of
December 31, 2020. Excluding the impact of the accrued capital gains-related
incentive fee expenses, the Company's estimated net income per share and net
investment income per share for the quarter ended December 31, 2020 were $0.81
and $0.50, respectively.
As of December 31, 2020, the Company had approximately $865 million of liquidity
in undrawn debt capacity and unrestricted cash. During the fourth quarter, the
Company added $20 million of commitments to its senior secured revolver,
bringing total capacity to $1.335 billion as of December 31, 2020. Estimated
debt to equity as of December 31, 2020 was approximately 0.95x, up from 0.81x as
of September 30, 2020. The Company's debt funding mix at quarter end was
comprised of approximately 58% unsecured debt, and the Company had approximately
$863 million of undrawn capacity under its revolving credit facility.
There has been no material change to the Company's weighted average portfolio
performance ratings from September 30, 2020 to December 31, 2020. As of
December 31, 2020, investments on non-accrual status was approximately 0.9% of
the portfolio at fair value, flat from the prior quarter. During the quarter
ended December 31, 2020, one additional portfolio company was placed on
non-accrual status, American Achievement Corporation. The Company's investments
in MD America Energy, LLC and J.C. Penney Company, Inc. were removed from
non-accrual status.
As previously announced, the Company will release its financial results for the
fourth quarter and fiscal year ended December 31, 2020 on Wednesday,
February 17, 2021 after market close and will hold an earnings conference call
on Thursday, February 18, 2021 at 8:30 a.m. Eastern Time.
The preliminary financial estimates provided herein have been prepared by, and
are the responsibility of, the Company's management. Neither KPMG LLP, the
Company's independent registered public accounting firm, nor any other
independent accountants, have audited, reviewed, compiled, or performed any
procedures with respect to the accompanying preliminary financial data.
These estimates are subject to the completion of the Company's financial closing
procedures and are not a comprehensive statement of the Company's financial
results as of December 31, 2020. Actual results may differ materially from these
estimates as a result of the completion of the Company's financial closing
procedures, final adjustments and other developments which may arise between now
and the time that the Company's financial results are finalized.
The information in this report shall not be deemed "filed" for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise
subject to the liabilities of that Section, and shall not be incorporated by
reference into any registration statement pursuant to the Securities Act of
1933, as amended, except as expressly set forth by specific reference in such
filing.
Forward-Looking Statements
Certain information contained in this current report on Form 8-K may constitute
"forward-looking statements" that involve substantial risks and uncertainties.
Such statements involve known and unknown risks, uncertainties and other factors
and undue reliance should not be placed thereon. These forward-looking
statements are not historical facts, but rather are based on current
expectations, estimates and projections about the Company, its current and
prospective portfolio investments, its industry, its beliefs and opinions, and
its assumptions. Words such as "anticipates," "expects," "intends," "plans,"
"will," "may," "continue," "believes," "seeks," "estimates," "would," "could,"
"should," "targets," "projects," "outlook," "potential," "predicts" and
variations of these words and similar expressions are intended to identify
forward-looking statements. These statements are not guarantees of future
performance and are subject to risks, uncertainties and other factors, some of
which are beyond the Company's control and difficult to predict and could cause
actual results to differ materially from those expressed or forecasted in the
forward-looking statements including, without limitation, the risks,
uncertainties and other factors identified in the Company's filings with the
Securities and Exchange Commission. Investors should not place undue reliance on
these forward-looking statements, which apply only as of the date on which the
Company makes them. The Company does not undertake any obligation to update or
revise any forward-looking statements or any other information contained herein,
except as required by applicable law.
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