NEW YORK--(BUSINESS WIRE)--Sixth Street Specialty Lending, Inc. (NYSE:TSLX) (“TSLX” or the “Company”) announced today that it has priced an underwritten public offering of $300.0 million in aggregate principal amount of 5.625% notes due 2030. The notes will mature on August 15, 2030 and may be redeemed in whole or in part at TSLX's option at any time at par plus a “make-whole” premium, if applicable. TSLX expects to use the net proceeds of the offering to pay down outstanding debt under its rev.
Sixth Street Specialty Lending, Inc. (NYSE:TSLX ) Q4 2024 Earnings Conference Call February 14, 2025 8:30 AM ET Company Participants Cami VanHorn - Head, Investor Relations Joshua Easterly - Chief Executive Officer Bo Stanley - President Ian Simmonds - Chief Financial Officer Conference Call Participants Finian O'Shea - Wells Fargo Securities Brian McKenna - Citizens JMP Mickey Schleien - Ladenburg Ken Lee - RBC Capital Markets Melissa Wedel - JPMorgan Robert Dodd - Raymond James Maxwell Fritscher - Truist Paul Johnson - KBW Operator Good morning, and welcome to Sixth Street Specialty Lending, Inc.'s Fourth Quarter and Fiscal Year Ended December 31, 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode.
Although the revenue and EPS for Sixth St (TSLX) give a sense of how its business performed in the quarter ended December 2024, it might be worth considering how some key metrics compare with Wall Street estimates and the year-ago numbers.
Sixth Street (TSLX) came out with quarterly earnings of $0.61 per share, beating the Zacks Consensus Estimate of $0.57 per share. This compares to earnings of $0.62 per share a year ago.
Sixth Street Specialty Lending is well-positioned to thrive in a decreasing interest rate environment while maintaining solid dividend coverage. TSLX's defensive portfolio features first-lien debt orientation, effective voting control on 78% of debt investments, and reasonable non-accruals at 1.9%. Despite interest rate cuts, TSLX's dividend coverage remains robust, with a margin of safety of 107% even with further 200 bps cuts.
Despite solid 2024 NII growth, Sixth Street Specialty Lending, Inc.'s realized and unrealized gains fell, but dividends and NII coverage remain strong. TSLX's portfolio is 94% secured loans, with 98.8% at floating rates, and has diversified industry exposure and internal ratings. TSLX trades at a premium to NAV; advised to add to your watch list and watch for market pullbacks for better entry points.
I am downgrading Sixth Street Specialty Lending stock to a hold due to its continued underperformance against peers and unjustified premium valuation. Despite a high 10.3% dividend yield and consistent dividend history, TSLX's total return is lackluster, only achieving a 1% YTD return. The non-accrual rate has increased to 1.9%, indicating rising vulnerability in the current high-interest rate environment.
While the top- and bottom-line numbers for Sixth St (TSLX) give a sense of how the business performed in the quarter ended September 2024, it could be worth looking at how some of its key metrics compare to Wall Street estimates and year-ago values.
Sixth Street (TSLX) came out with quarterly earnings of $0.57 per share, missing the Zacks Consensus Estimate of $0.58 per share. This compares to earnings of $0.60 per share a year ago.
Sixth Street Specialty Lending is a defensive BDC with strong base dividend coverage, even amid potential interest rate cuts. TSLX's portfolio is well-diversified, focusing on first-lien debt, with low non-accruals and reasonable industry exposure. Despite interest rate cuts, TSLX's dividend coverage remains robust, with room for special dividends.