PART I [ITEM 1. Business](index=4&type=section&id=ITEM%201.%20Business) TSLX is a BDC and RIC specializing in direct senior secured lending to U.S. middle-market companies, leveraging its Adviser's platform for investment sourcing and co-investment opportunities - TSLX is a specialty finance company focused on direct originations of senior secured loans to U.S.-domiciled middle-market companies, defined as having annual EBITDA of **$10 million to $250 million**[18](index=18&type=chunk) - As of December 31, 2022, **98.9% of debt investments bore floating interest rates**, with **100.0% subject to interest rate floors**, acting as a hedge against inflation[20](index=20&type=chunk) - The company operates as an externally managed BDC and has elected RIC status for U.S. federal income tax purposes, requiring distribution of at least **90% of investment company taxable income**[22](index=22&type=chunk)[63](index=63&type=chunk)[143](index=143&type=chunk) - TSLX's Adviser, Sixth Street Specialty Lending Advisers, LLC, and its affiliate Sixth Street, provide significant scale, resources, market expertise, and a dedicated team of **44 personnel (34 investment professionals)** for investment sourcing, management, and due diligence[25](index=25&type=chunk)[71](index=71&type=chunk) - The company has an SEC exemptive order allowing co-investment with Sixth Street affiliates in U.S. middle-market loan originations and certain follow-on investments, which is particularly useful for larger capital commitments[27](index=27&type=chunk)[28](index=28&type=chunk) Investment Portfolio Composition (as of December 31, 2022) | Investment Type | Percentage of Fair Value | | :---------------- | :----------------------- | | First-lien debt | 90.3% | | Second-lien debt | 1.5% | | Mezzanine | 0.4% | | Equity & other | 6.0% | | Structured credit | 1.8% | Investment Portfolio by Industry (as of December 31, 2022) | Industry | Percentage of Fair Value | | :----------------------- | :----------------------- | | Business Services | 14.4% | | Internet Services | 13.9% | | Financial Services | 12.8% | | Human Resource Support Services | 11.9% | | Retail and Consumer Products | 11.4% | | Healthcare | 9.9% | | Education | 5.8% | | Hotel, Gaming and Leisure | 4.5% | | Oil, Gas and Consumable Fuels | 3.9% | | Other | 3.3% | | Communications | 2.7% | | Manufacturing | 1.3% | | Automotive | 1.2% | | Transportation | 1.2% | | Chemicals | 0.7% | | Office Products | 0.7% | | Marketing Services | 0.4% | | Pharmaceuticals | 0.0% | | **Total** | **100.0%** | Total Investments (Fair Value) (2022 vs. 2021) | Year | Fair Value ($ millions) | Number of Portfolio Companies | | :------------- | :---------------------- | :---------------------------- | | Dec 31, 2022 | $2,787.9 | 121 | | Dec 31, 2021 | $2,521.6 | 72 | Debt Obligations (as of December 31, 2022) | Debt Type | Aggregate Principal Committed ($ millions) | Outstanding Principal ($ millions) | Amount Available ($ millions) | Carrying Value ($ millions) | | :---------------------- | :--------------------------------------- | :------------------------------- | :---------------------------- | :-------------------------- | | Revolving Credit Facility | $1,585.0 | $719.3 | $865.7 | $706.2 | | 2023 Notes | $150.0 | $150.0 | — | $149.9 | | 2024 Notes | $347.5 | $347.5 | — | $325.5 | | 2026 Notes | $300.0 | $300.0 | — | $260.2 | | **Total Debt** | **$2,382.5** | **$1,516.8** | **$865.7** | **$1,441.8** | Interest Expense Components (Years Ended December 31) | ($ in millions) | 2022 | 2021 | 2020 | | :------------------------ | :---- | :---- | :---- | | Interest expense | $49.9 | $39.7 | $36.5 | | Commitment fees | $4.1 | $4.4 | $3.7 | | Amortization of deferred financing costs | $5.7 | $6.1 | $5.1 | | Accretion of original issue discount | $0.8 | $0.7 | $0.5 | | Swap settlement | $2.5 | $(12.1) | $(6.4) | | **Total Interest Expense** | **$63.0** | **$38.8** | **$39.4** | | Average debt outstanding | $1,342.0 | $1,223.4 | $1,001.6 | | Weighted average interest rate | 3.9% | 2.3% | 3.0% | Management and Incentive Fees (Years Ended December 31) | Fee Type ($ in millions) | 2022 | 2021 | 2020 | | :----------------------- | :---- | :---- | :---- | | Management Fees (gross of waivers) | $39.9 | $37.1 | $32.1 | | Management Fees waived (Leverage Waiver) | $0.4 | $0.2 | — | | Incentive Fees (total) | $24.5 | $46.6 | $32.9 | | Incentive Fees (realized & payable) | $33.4 | $33.1 | $31.5 | | Incentive Fees (accrued related to Capital Gains) | $(8.9) | $13.5 | $1.4 | [ITEM 1A. Risk Factors](index=30&type=section&id=ITEM%201A.%20Risk%20Factors) The company faces significant risks including dependence on its Adviser, BDC regulatory constraints, leverage, market competition, economic downturns, illiquid investments, interest rate fluctuations, and cybersecurity threats - Key risks include dependence on the Adviser's management personnel, regulatory constraints as a BDC (e.g., **70% qualifying asset rule**, **150% asset coverage ratio** for borrowings), and the magnifying effect of leverage on gains and losses[159](index=159&type=chunk)[161](index=161&type=chunk)[163](index=163&type=chunk)[168](index=168&type=chunk) - The company operates in a highly competitive market for investment opportunities, facing larger competitors with greater resources and fewer regulatory restrictions[179](index=179&type=chunk)[180](index=180&type=chunk) - Conflicts of interest may arise due to the Adviser managing other investment funds with overlapping objectives and allocating investment opportunities[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk) - Economic downturns, including the COVID-19 pandemic and the Russia-Ukraine conflict, can impair portfolio companies' operations, increase defaults, and negatively impact financial performance[15](index=15&type=chunk)[231](index=231&type=chunk)[236](index=236&type=chunk)[241](index=241&type=chunk) - Investments are highly risky and speculative, primarily in unrated, below-investment-grade debt of highly leveraged middle-market companies, with values determined by the Board and subject to inherent subjectivity and illiquidity[243](index=243&type=chunk)[249](index=249&type=chunk)[252](index=252&type=chunk) - The majority of debt investments are floating-rate, exposing the company to interest rate risk, where increases can raise borrowing costs and borrower repayment obligations, while decreases can reduce net interest income[191](index=191&type=chunk)[259](index=259&type=chunk) - Changes in tax laws (e.g., Tax Cuts and Jobs Act, Inflation Reduction Act) could increase the tax burden on portfolio assets, affecting their ability to service debt[229](index=229&type=chunk)[230](index=230&type=chunk) - Cybersecurity risks and system failures could disrupt business operations, compromise confidential information, and damage business relationships, leading to significant losses and reputational harm[218](index=218&type=chunk) [ITEM 1B. Unresolved Staff Comments](index=59&type=section&id=ITEM%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC [ITEM 2. Properties](index=59&type=section&id=ITEM%202.%20Properties) The company's principal executive office is in Dallas, Texas, and it does not own any real estate - The company's principal executive office is located at **2100 McKinney Avenue, Suite 1500, Dallas, TX 75201**[322](index=322&type=chunk) - The company does not own any real estate[322](index=322&type=chunk) [ITEM 3. Legal Proceedings](index=59&type=section&id=ITEM%203.%20Legal%20Proceedings) No material pending or threatened legal proceedings requiring disclosure are currently known to the company - As of December 31, 2022, management is not aware of any material pending or threatened litigation that would require accounting recognition or financial statement disclosure[323](index=323&type=chunk) [ITEM 4. Mine Safety Disclosures](index=59&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company PART II [ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=60&type=section&id=ITEM%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) TSLX common stock trades on the NYSE, with 3 holders of record as of February 2023, and the company repurchased 187,664 shares in October 2022 under its $50 million program - The company's common stock is traded on the NYSE under the symbol '**TSLX**'[326](index=326&type=chunk) - As of February 16, 2023, there were approximately **3 holders of record** of the company's common stock[327](index=327&type=chunk) - The Board authorized a stock repurchase program of up to **$50 million**, most recently renewed as of November 1, 2022[329](index=329&type=chunk) Issuer Purchases of Equity Securities (Three Months Ended December 31, 2022) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs ($ in thousands) | | :------------ | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------------------ | | October 2022 | 187,664 | $16.88 | $43,833 | | November 2022 | — | — | $50,000 | | December 2022 | — | — | $50,000 | | **Total** | **187,664** | **$16.88** | | Senior Securities Outstanding (as of December 31, 2022 and 2021) | Class and Year/Period | Total Amount Outstanding Exclusive of Treasury Securities ($ in millions) | Asset Coverage Per Unit ($ per $1,000 of indebtedness) | | :-------------------- | :-------------------------------------------------------------------- | :----------------------------------------------------- | | **December 31, 2022** | | | | Revolving Credit Facilities | $719.3 | $1,885.7 | | 2023 Notes | $150.0 | $1,885.7 | | 2024 Notes | $346.8 | $1,885.7 | | 2026 Notes | $298.5 | $1,885.7 | | **December 31, 2021** | | | | Revolving Credit Facilities | $316.4 | $2,053.6 | | 2022 Convertible Notes | $100.0 | $2,053.6 | | 2023 Notes | $150.0 | $2,053.6 | | 2024 Notes | $347.5 | $2,053.6 | | 2026 Notes | $300.0 | $2,053.6 | [ITEM 6. Selected Financial Data](index=63&type=section&id=ITEM%206.%20Selected%20Financial%20Data) This item is not applicable, with selected financial data presented elsewhere in the report [ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=64&type=section&id=ITEM%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's business, investment framework, and financial performance, detailing investment income, expenses, leverage, portfolio activity, liquidity, and critical accounting policies, noting increased net investment income in 2022 despite unrealized losses - TSLX is a specialty finance company focused on lending to U.S. middle-market companies, with an investment framework emphasizing business and sector selection, investment structuring (primarily senior secured debt), direct deal origination, and risk mitigation (e.g., call protection, floating rates with floors)[341](index=341&type=chunk)[346](index=346&type=chunk)[349](index=349&type=chunk)[350](index=350&type=chunk)[351](index=351&type=chunk) - The company's primary revenues are interest income from investments, supplemented by dividends and various loan origination and other fees, with net investment income influenced by the spread between investment returns and funding costs, as well as prepayment fees[362](index=362&type=chunk)[363](index=363&type=chunk)[364](index=364&type=chunk)[365](index=365&type=chunk) - Interest income increased from **$266.7 million** in 2021 to **$297.6 million** in 2022, primarily due to higher interest rates and increased total assets outstanding, with other income also increasing due to higher amendment and miscellaneous fees[394](index=394&type=chunk) - Total interest expense increased from **$38.8 million** in 2021 to **$63.0 million** in 2022, driven by an increase in the average interest rate on debt outstanding (from **2.3% to 3.9%**) and higher average debt outstanding[398](index=398&type=chunk) - Net change in unrealized gains (losses) shifted from a gain of **$40.5 million** in 2021 to a loss of **$74.9 million** in 2022, primarily due to negative credit-related adjustments and changes in credit spreads[392](index=392&type=chunk)[410](index=410&type=chunk) - The company's liquidity is primarily derived from equity issuances, credit facilities, and cash flows from operations, with **$865.7 million** available on its Revolving Credit Facility as of December 31, 2022[426](index=426&type=chunk)[427](index=427&type=chunk) - The company maintains RIC status by distributing at least **90% of its investment company taxable income** and tax-exempt income, and aims to minimize excise tax exposure[474](index=474&type=chunk)[476](index=476&type=chunk) Investment Activity (Years Ended December 31) | ($ in millions) | 2022 | 2021 | 2020 | | :---------------------------------- | :-------- | :-------- | :-------- | | Gross originations | $4,240.9 | $4,269.9 | $3,296.8 | | Less: Syndications/sell downs | $3,156.7 | $3,152.5 | $2,112.1 | | **Total new investment commitments** | **$1,084.2** | **$1,117.4** | **$1,184.7** | | Principal amount of investments funded | $864.0 | $1,117.4 | $939.0 | | Principal amount of investments sold or repaid | $653.8 | $1,004.5 | $941.3 | | Number of new investment commitments in new portfolio companies | 65 | 25 | 31 | | Weighted average interest rate of new investment commitments | 11.9% | 9.2% | 10.2% | Portfolio Composition and Yields (as of December 31) | Metric | 2022 | 2021 | | :----------------------------------------- | :------ | :------ | | First-lien debt investments (% of fair value) | 90.3% | 91.2% | | Second-lien debt investments (% of fair value) | 1.5% | 1.7% | | Mezzanine investments (% of fair value) | 0.4% | 0.7% | | Equity and other investments (% of fair value) | 6.0% | 6.0% | | Structured credit investments (% of fair value) | 1.8% | 1.8% | | Weighted average total yield of debt and income producing securities at fair value | 13.5% | 10.0% | | Weighted average interest rate of debt and income producing securities | 13.1% | 9.5% | | Weighted average spread over LIBOR of all floating rate investments | 8.7% | 9.4% | Operating Results (Years Ended December 31) | ($ in millions) | 2022 | 2021 | 2020 | | :-------------------------------------------- | :------ | :------ | :------ | | Total investment income | $309.3 | $278.6 | $270.0 | | Net expenses | $140.4 | $135.8 | $117.3 | | Net investment income before income taxes | $168.9 | $142.8 | $152.7 | | Income taxes, including excise taxes | $2.6 | $0.4 | $5.7 | | **Net investment income** | **$166.3** | **$142.4** | **$147.0** | | Net realized gains (losses) | $16.7 | $28.9 | $(2.6) | | Net change in unrealized gains (losses) | $(74.9) | $40.5 | $33.7 | | **Net increase in net assets resulting from operations** | **$108.1** | **$211.8** | **$178.1** | Contractual Obligations (as of December 31, 2022) | ($ in millions) | Total | Less than 1 year | 1-3 years | 3-5 years | After 5 years | | :------------------------ | :-------- | :--------------- | :-------- | :-------- | :------------ | | Revolving Credit Facility | $719.3 | — | — | $719.3 | — | | 2023 Notes | $150.0 | $150.0 | — | — | — | | 2024 Notes | $347.5 | — | $347.5 | — | — | | 2026 Notes | $300.0 | — | — | $300.0 | — | | **Total Contractual Obligations** | **$1,516.8** | **$150.0** | **$347.5** | **$1,019.3** | **—** | [ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk](index=90&type=section&id=ITEM%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to valuation, interest rate, and currency risks, outlining management strategies such as floating-rate investments with floors and hedging instruments - The company is subject to valuation risk due to its primary investments in illiquid debt and equity securities of private companies, which are valued at fair value determined in good faith by the Board, involving subjective judgment[501](index=501&type=chunk) - Interest rate risk is a significant concern, as **98.9% of debt investments bear floating rates with floors**, and credit facilities also have floating rates, with interest rate swaps used to align fixed-rate debt liabilities with the floating-rate investment portfolio[504](index=504&type=chunk) - Currency risk arises from foreign currency-denominated investments, which are translated into U.S. dollars, and may be mitigated through hedging techniques such as forward contracts or borrowing in local currencies under the Revolving Credit Facility[508](index=508&type=chunk) Annualized Impact of Hypothetical Base Rate Changes on Net Income (as of December 31, 2022) | Basis Point Change | Interest Income ($ millions) | Interest Expense ($ millions) | Net Income ($ millions) | | :----------------- | :--------------------------- | :---------------------------- | :---------------------- | | Up 300 basis points | $83.0 | $45.5 | $37.5 | | Up 200 basis points | $55.3 | $30.3 | $25.0 | | Up 100 basis points | $27.7 | $15.2 | $12.5 | | Down 25 basis points | $(6.9) | $(3.8) | $(3.1) | [ITEM 8. Consolidated Financial Statements and Supplementary Data](index=92&type=section&id=ITEM%208.%20Consolidated%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements, including balance sheets, statements of operations, schedules of investments, statements of changes in net assets, and cash flows, along with KPMG LLP's report and detailed notes on accounting policies and financial instruments [Report of Independent Registered Public Accounting Firm](index=93&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an unqualified opinion on the financial statements and internal controls, highlighting the subjective fair value assessment of Level 3 investments as a critical audit matter - KPMG LLP issued an unqualified opinion on the consolidated financial statements for the years ended December 31, 2022 and 2021, and on the effectiveness of internal control over financial reporting as of December 31, 2022[515](index=515&type=chunk) - The critical audit matter identified was the assessment of the fair value of Level 3 debt and equity investments, which involved a high degree of subjective auditor judgment due to assumptions related to market yields, comparable financial performance multiples, and expected lives[522](index=522&type=chunk)[523](index=523&type=chunk) [Consolidated Balance Sheets](index=95&type=section&id=Consolidated%20Balance%20Sheets) The balance sheets show total investments at fair value increased to **$2,787.9 million** in 2022, with total assets reaching **$2,836.9 million** and net assets growing to **$1,341.6 million** - Investments at fair value increased by approximately **$266.3 million** from 2021 to 2022[528](index=528&type=chunk) - Total debt (net of deferred financing costs) increased by approximately **$255.8 million** from 2021 to 2022[528](index=528&type=chunk) Consolidated Balance Sheet Highlights (as of December 31) | ($ in thousands) | 2022 | 2021 | | :---------------------------- | :---------- | :---------- | | Investments at fair value | $2,787,925 | $2,521,593 | | Cash and cash equivalents | $25,647 | $15,967 | | Total Assets | $2,836,947 | $2,551,857 | | Debt (net) | $1,441,796 | $1,185,964 | | Total Liabilities | $1,495,378 | $1,276,009 | | Total Net Assets | $1,341,569 | $1,275,848 | | Net Asset Value Per Share | $16.48 | $16.84 | [Consolidated Statements of Operations](index=96&type=section&id=Consolidated%20Statements%20of%20Operations) Total investment income increased to **$309.3 million** in 2022, driving net investment income to **$166.3 million**, though a **$75.0 million** net unrealized loss reduced the net increase in assets from operations to **$108.1 million** - Net investment income increased by **$23.968 million** from 2021 to 2022, primarily due to higher interest income[531](index=531&type=chunk) - The net change in unrealized gains (losses) shifted from a gain of **$40.546 million** in 2021 to a loss of **$74.969 million** in 2022, significantly impacting the overall increase in net assets[531](index=531&type=chunk) Consolidated Statements of Operations Highlights (Years Ended December 31) | ($ in thousands) | 2022 | 2021 | 2020 | | :-------------------------------------------- | :---------- | :---------- | :---------- | | Total Investment Income | $309,305 | $278,593 | $270,037 | | Net Expenses | $140,356 | $135,850 | $117,273 | | Net Investment Income Before Income Taxes | $168,949 | $142,743 | $152,764 | | Income taxes, including excise taxes | $2,622 | $384 | $5,760 | | **Net Investment Income** | **$166,327** | **$142,359** | **$147,004** | | Total net change in unrealized gains (losses) | $(74,969) | $40,546 | $33,695 | | Total net realized gains (losses) | $16,695 | $28,875 | $(2,591) | | **Increase (decrease) in Net Assets Resulting from Operations** | **$108,053** | **$211,780** | **$178,108** | | Earnings per common share—basic | $1.38 | $2.93 | $2.65 | | Earnings per common share—diluted | $1.38 | $2.79 | $2.65 | [Consolidated Schedules of Investments](index=97&type=section&id=Consolidated%20Schedules%20of%20Investments) The schedules detail the investment portfolio by type, industry, and valuation, predominantly comprising variable-rate first-lien debt with interest rate floors, and identify non-qualifying, affiliated, and controlled investments - As of December 31, 2022, the largest industry concentrations in the debt portfolio were Business Services (**28.5%**), Financial Services (**25.8%**), and Internet Services (**27.5%**)[97](index=97&type=chunk)[98](index=98&type=chunk) - Many debt investments feature variable rate structures, often referenced to SOFR or LIBOR, with interest rate floors[97](index=97&type=chunk)[102](index=102&type=chunk) - Non-qualifying assets under the 1940 Act represented **9.7% of total assets** as of December 31, 2022[102](index=102&type=chunk) - As of December 31, 2022, the estimated cost basis of investments for U.S. federal tax purposes was **$2,787,005 thousand**, with estimated gross unrealized gains of **$109,609 thousand** and losses of **$105,786 thousand**[103](index=103&type=chunk) Investment Portfolio by Type (as of December 31, 2022) | Investment Type | Amortized Cost ($ thousands) | Fair Value ($ thousands) | Percentage of Net Assets | | :------------------------ | :--------------------------- | :----------------------- | :----------------------- | | Debt Investments | $2,579,557 | $2,568,814 | 188.1% | | Equity and Other Investments | $195,169 | $219,111 | 16.8% | | Structured Credit | $53,066 | $51,426 | 4.4% | | **Total Investments** | **$2,774,726** | **$2,787,925** | **204.9%** | [Consolidated Statements of Changes in Net Assets](index=111&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) Net assets increased by **$108.1 million** from operations in 2022, influenced by **$77.6 million** in stock issuances for convertible notes, **$30.5 million** from dividend reinvestment, **$6.2 million** in repurchases, and **$144.3 million** in declared dividends - The company issued **4,360,125 shares of common stock** in 2022 for **$77.6 million** to settle convertible notes, and **1,625,826 shares** for **$30.5 million** through its dividend reinvestment plan[564](index=564&type=chunk) - The company repurchased **368,206 shares of common stock** for **$6.2 million** in 2022[564](index=564&type=chunk) Changes in Net Assets (Years Ended December 31) | ($ in thousands) | 2022 | 2021 | 2020 | | :-------------------------------------------- | :---------- | :---------- | :---------- | | Balance, beginning of period | $1,275,848 | $1,161,315 | $1,119,297 | | Net investment income | $166,327 | $142,359 | $147,004 | | Net change in unrealized gains (losses) on investments and foreign currency translation | $(74,969) | $40,546 | $33,695 | | Net realized gain (loss) on investments and foreign currency transactions | $16,695 | $28,875 | $(2,591) | | Common stock issued in settlement of convertible notes | $77,642 | $42,273 | — | | Purchases of treasury stock | $(6,168) | — | $(2,932) | | Stock issued in connection with dividend reinvestment plan | $30,516 | $36,351 | $22,306 | | Dividends declared from distributable earnings | $(144,322) | $(261,490) | $(154,554) | | **Balance, End of Period** | **$1,341,569** | **$1,275,848** | **$1,161,315** | [Consolidated Statements of Cash Flows](index=112&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash used in operating activities was **$224.5 million** in 2022, offset by **$234.2 million** from financing activities, resulting in a **$9.7 million** net increase in cash, bringing the year-end total to **$25.6 million** - In 2022, cash used in operating activities was primarily driven by **$995.6 million** in funding for portfolio investments, partially offset by **$699.3 million** from repayments and proceeds from investments[428](index=428&type=chunk)[567](index=567&type=chunk) - Financing activities in 2022 included **$1,329.9 million** in borrowings and **$77.6 million** from common stock issuance for convertible note settlement, offset by **$918.1 million** in Revolving Credit Facility paydowns and **$144.3 million** in dividends paid[428](index=428&type=chunk)[567](index=567&type=chunk) Consolidated Statements of Cash Flows Highlights (Years Ended December 31) | ($ in thousands) | 2022 | 2021 | 2020 | | :-------------------------------------------- | :---------- | :---------- | :---------- | | Net Cash Provided by (Used) in Operating Activities | $(224,532) | $2,452 | $145,066 | | Net Cash Provided by (Used) in Financing Activities | $234,212 | $241 | $(145,935) | | Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | $9,680 | $2,693 | $(869) | | Cash, Cash Equivalents, and Restricted Cash, End of Period | $25,647 | $15,967 | $13,274 | [Notes to Consolidated Financial Statements](index=114&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, including Level 3 fair value measurement, income recognition, RIC tax treatment, related party transactions, derivatives, debt obligations, and financial highlights, providing context for the financial statements - The company applies ASC Topic 946, Financial Services – Investment Companies, and prepares financial statements in accordance with U.S. GAAP[572](index=572&type=chunk) - Investments are valued at fair value, with substantially all investments being non-publicly traded and classified as **Level 3** in the fair value hierarchy, requiring significant unobservable inputs and Board determination[577](index=577&type=chunk)[582](index=582&type=chunk) - Interest income is accrued, including amortization of discounts and premiums, and loans are generally placed on non-accrual status when payments are **30 days past due** or collectability is doubtful[594](index=594&type=chunk)[596](index=596&type=chunk) - The company uses interest rate swaps to hedge fixed-rate debt obligations and certain fixed-rate investments, with changes in fair value for effective hedges recognized as components of interest expense[586](index=586&type=chunk)[630](index=630&type=chunk) - The company's asset coverage ratio was **188.6%** as of December 31, 2022, in compliance with the 1940 Act's **150% requirement**[650](index=650&type=chunk) - The 2022 Convertible Notes matured on August 1, 2022, with **$79.2 million** principal settled via common stock issuance and the remaining balance with cash[674](index=674&type=chunk)[675](index=675&type=chunk) Fair Value Hierarchy of Investments (as of December 31, 2022) | Investment Type | Level 1 ($ thousands) | Level 2 ($ thousands) | Level 3 ($ thousands) | Total ($ thousands) | | :------------------------ | :-------------------- | :-------------------- | :-------------------- | :------------------ | | First-lien debt investments | — | $21,935 | $2,495,959 | $2,517,894 | | Second-lien debt investments | — | — | $40,762 | $40,762 | | Mezzanine debt investments | — | — | $10,158 | $10,158 | | Equity and other investments | $7,498 | $13,128 | $147,059 | $167,685 | | Structured credit investments | — | $51,426 | — | $51,426 | | **Total investments at fair value** | **$7,498** | **$86,489** | **$2,693,938** | **$2,787,925** | Debt Obligations Carrying Value (as of December 31, 2022) | Debt Type | Principal Amount ($ thousands) | Carrying Value ($ thousands) | | :---------------------- | :----------------------------- | :--------------------------- | | Revolving Credit Facility | $719,328 | $706,156 | | 2023 Notes | $150,000 | $149,960 | | 2024 Notes | $347,500 | $325,492 | | 2026 Notes | $300,000 | $260,188 | | **Total Debt** | **$1,516,828** | **$1,441,796** | Dividends Declared per Share (Years Ended December 31) | Dividend Type | 2022 | 2021 | 2020 | | :------------ | :---- | :---- | :---- | | Supplemental | $0.15 | $0.20 | $0.16 | | Base | $1.65 | $1.64 | $1.64 | | Special | — | $1.75 | $0.50 | | **Total** | **$1.84** | **$3.59** | **$2.30** | Financial Highlights (Per Share Data, Years Ended December 31) | Metric | 2022 | 2021 | 2020 | | :------------------------------------ | :------ | :------ | :------ | | Net asset value, beginning of period | $16.84 | $17.16 | $16.83 | | Net investment income | $2.13 | $1.97 | $2.19 | | Net realized and unrealized gains (losses) | $(0.75) | $0.96 | $0.46 | | Total from operations | $1.38 | $2.93 | $2.65 | | Dividends declared | $(1.84) | $(3.59) | $(2.30) |\ | Net Asset Value, End of Period | $16.48 | $16.84 | $17.16 | | Total return based on market value with reinvestment of dividends | (15.78)% | 32.80% | 11.24% | | Ratio of net expenses to average net assets | 11.05% | 11.17% | 11.10% | PART III [ITEM 10. Directors, Executive Officers and Corporate Governance](index=142&type=section&id=ITEM%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance, including the SOX Code of Business Conduct and Ethics, is incorporated by reference from the 2023 proxy statement - Information for this item is incorporated by reference from the company's proxy statement for the 2023 annual meeting of stockholders[736](index=736&type=chunk) - The SOX Code of Business Conduct and Ethics is available on the company's website and any substantive amendments or waivers will be disclosed there or via Form 8-K[737](index=737&type=chunk) [ITEM 11. Executive Compensation](index=142&type=section&id=ITEM%2011.%20Executive%20Compensation) Executive compensation information is incorporated by reference from the 2023 annual meeting proxy statement - Information for this item is incorporated by reference from the company's proxy statement for the 2023 annual meeting of stockholders[738](index=738&type=chunk) [ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=142&type=section&id=ITEM%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership details for beneficial owners and management are incorporated by reference from the 2023 annual meeting proxy statement - Information for this item is incorporated by reference from the company's proxy statement for the 2023 annual meeting of stockholders[739](index=739&type=chunk) [ITEM 13. Certain Relationships and Related Transactions, and Director Independence](index=142&type=section&id=ITEM%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related transactions and director independence is incorporated by reference from the 2023 annual meeting proxy statement - Information for this item is incorporated by reference from the company's proxy statement for the 2023 annual meeting of stockholders[740](index=740&type=chunk) [ITEM 14. Principal Accountant Fees and Services](index=142&type=section&id=ITEM%2014.%20Principal%20Accountant%20Fees%20and%20Services) Principal accountant fees and services information is incorporated by reference from the 2023 annual meeting proxy statement - Information for this item is incorporated by reference from the company's proxy statement for the 2023 annual meeting of stockholders[741](index=741&type=chunk) PART IV [ITEM 15. Exhibits and Financial Statement Schedules](index=143&type=section&id=ITEM%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the Form 10-K, including corporate governance documents, debt agreements, and regulatory certifications - The section includes a comprehensive list of exhibits, such as the Restated Certificate of Incorporation, Amended and Restated Bylaws, various Indentures for Convertible Senior Notes and other Notes (2023, 2024, 2026), and multiple amendments to the Second Amended and Restated Senior Secured Revolving Credit Agreement[744](index=744&type=chunk)[746](index=746&type=chunk)[747](index=747&type=chunk) - Other exhibits include the Dividend Reinvestment Plan, Custodian Agreement, and certifications from the Chief Executive Officer and Chief Financial Officer (31.1, 31.2, 32)[746](index=746&type=chunk)[747](index=747&type=chunk) [ITEM 16. Form 10-K Summary](index=146&type=section&id=ITEM%2016.%20Form%2010-K%20Summary) This item indicates that a Form 10-K Summary is not applicable for this report

Financial Data and Key Metrics Changes - Adjusted net investment income per share for Q3 2022 was $0.47, with an annualized return on equity of 11.5% [11][54] - Adjusted net income per share was $0.43, corresponding to an annualized return on equity of 10.6% [11][54] - The quarterly base dividend was increased by approximately 7.1% to $0.45 per share, with a booked dividend yield rising to 11% from 10.3% [12][18] - Total investments reached $2.8 billion, up from $2.5 billion in the prior quarter [54] - Weighted average yield on debt and income-producing securities at amortized cost increased to 12.2% from 10.9% quarter-over-quarter [49] Business Line Data and Key Metrics Changes - The company had $385 million of commitments and $274 million of fundings across seven new investments during the quarter [39] - Portfolio composition remained strong, with 78% of the portfolio in software and business services sectors [45] - The performance rating of the portfolio improved to a weighted average rating of 1.12 from 1.13 in the previous quarter [51] Market Data and Key Metrics Changes - New issued leveraged loan volumes were down 86% in Q3 relative to the same period last year, indicating a shift towards private credit [32] - LCD first lien and second lien spreads widened by 10 and 152 basis points, respectively, during Q3 [34] - The company noted a lender-friendly environment with higher overall yields and issuers willing to pay higher fees [34] Company Strategy and Development Direction - The company aims to leverage its strong balance sheet to be a valuable partner in a tightening credit market, focusing on private credit solutions [35][75] - The strategy includes maintaining a conservative approach to credit selection and active portfolio management to drive returns [28][75] - The company is positioned to navigate economic uncertainty and capitalize on opportunities arising from market dislocation [29][75] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's health, with no material amendment activity reported [98] - The operating environment is characterized by rising interest rates and inflation, which may lead to demand disruption [22][25] - The company anticipates continued strong performance in the private credit sector, driven by its ability to avoid credit losses [76] Other Important Information - The company has a robust liquidity position with $846 million of unfunded revolver capacity at quarter end [56] - The Board renewed the stock repurchase program with a total size reset to $50 million [61] - The company experienced unrealized losses due to wider market spreads, impacting net asset value [21][62] Q&A Session Summary Question: Insights on LeanTaaS and deal structuring - Management noted that the transaction was earlier in the pipeline and preferred to hold less unfunded commitments to drive economics in the current environment [82] Question: Investment landscape and deal pricing - Management indicated that underwriting standards have tightened, with higher spreads and lower leverage compared to previous periods [90] Question: Amendment activity in the portfolio - Management reported no material amendment activity, indicating a strong portfolio quality [98] Question: Future paydown activity - Management explained that paydowns typically drive activity-based income and are influenced by credit spread environments [102] Question: Supply side in private credit - Management highlighted that the supply of private credit has decreased, leading to wider spreads and tighter underwriting standards [112] Question: ABL strategy in a higher inflationary environment - Management emphasized the importance of evaluating collateral value dynamically in the current environment [114] Question: Structure of loans in the portfolio - Management expects a significant increase in highly structured loans as credit availability tightens [124]

S I X T H S T R E E T S P E C I A L T Y L E N D I N G Quarter Ended September 30, 2022 EARNINGS PRESENTATION DISCLAIMER AND FORWARD-LOOKING STATEMENT References in this presentation ("Presentation") to "TSLX," "we," "us," "our" and "the Company" refer to Sixth Street Specialty Lending, Inc. This Presentation includes forward-looking statements about TSLX that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, ...

S I X T H S T R E E T S P E C I A L T Y L E N D I N G Quarter Ended June 30, 2022 EARNINGS PRESENTATION DISCLAIMER AND FORWARD-LOOKING STATEMENT References in this presentation ("Presentation") to "TSLX," "we," "us," "our" and "the Company" refer to Sixth Street Specialty Lending, Inc. This Presentation includes forward-looking statements about TSLX that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estim ...

Financial Data and Key Metrics Changes - Adjusted net investment income per share for Q2 2022 was $0.42, with an annualized return on equity of 9.9% [10] - Adjusted net loss per share was $0.30, primarily due to unrealized losses from wider market spreads [11] - Net asset value per share decreased by approximately 3.4% from $16.84 to $16.27, driven by unrealized losses of $0.66 per share [17][60] - Total investments at quarter-end were $2.5 billion, slightly up from the previous quarter [53] Business Line Data and Key Metrics Changes - 93% of total investment income was generated through interest and dividend income, compared to 85% in 2021 and 79% in 2020 [14] - The weighted average yield on debt and income-producing securities at amortized cost increased to 10.9% from 10.3% quarter-over-quarter [47] - The company had $379 million of commitments and $325 million of fundings across 8 new investments and upsizes during the quarter [36] Market Data and Key Metrics Changes - The company noted a pause in repayments in the latter half of the quarter, with $212 million of paydowns across 6 full and 1 partial investment realization [42] - The repayment activity was in line with historical averages, with 65% occurring in April [44] Company Strategy and Development Direction - The company is focused on maintaining a defensive portfolio, with 90% of its investments in first lien loans [30] - The strategy includes a differentiated approach to underwriting, emphasizing businesses with variable cost structures and strong recurring revenue [28] - The company anticipates increased deal flow in the second half of 2022 while remaining selective in investment opportunities [35] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the potential for rising rates to lead to a default cycle, particularly in a stagflationary environment [92] - The overall health of borrowers remains strong, despite rising costs and inflationary pressures [23] - The company expects to exceed the top end of its target return on equity for the full year 2022 due to positive asset sensitivity [68] Other Important Information - The Board approved a third quarter base dividend of $0.42 per share, an increase of $0.01 from the previous quarter [24] - The company has significant liquidity, with $1.2 billion of undrawn capacity on its revolving credit facility [56] Q&A Session Summary Question: About the new BDC Sixth Street has on file - Management indicated that the new BDC has a completely different investment strategy than Sixth Street Specialty Lending, with limited overlap [74][75] Question: Thoughts on a peer lowering its base fee - Management noted that the peer has a history of performance issues and that their yield is lower compared to Sixth Street's [76][82] Question: Fee income expectations in a rising rate environment - Management clarified that their portfolio is spread-sensitive rather than rate-sensitive, and they expect M&A activity to increase over time [85][90] Question: Expectations for defaults in the current environment - Management acknowledged that defaults are likely to increase but expressed confidence in the defensive positioning of their portfolio [92][96] Question: Risks in certain verticals - Management highlighted low-margin businesses with commodity inputs as more at risk in the current environment [106] Question: CLO investments compared to traditional debt investments - Management explained that CLO investments offer greater loss-taking ability and are a more efficient use of capital compared to private loans [111] Question: Impact of valuation changes - Management stated that the majority of valuation changes were driven by spread movements rather than performance-based markdowns [113][115]

(Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Exact name of registrant as specified in its charter) Delaware 27-3380000 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 2100 McKinney A ...

S I X T H S T R E E T S P E C I A L T Y L E N D I N G Quarter Ended March 31, 2022 EARNINGS PRESENTATION DISCLAIMER AND FORWARD-LOOKING STATEMENT References in this presentation ("Presentation") to "TSLX," "we," "us," "our" and "the Company" refer to Sixth Street Specialty Lending, Inc. This Presentation includes forward-looking statements about TSLX that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, esti ...

Financial Data and Key Metrics Changes - The adjusted net investment income per share for Q1 2022 was $0.49, corresponding to an annualized return on equity of 11.6% [9] - The adjusted net income per share was $0.56, corresponding to an annualized return on equity of 13.2% [9] - The net asset value per share at quarter end was $16.88, an increase of $0.15 or 1% from the previous quarter [16] - Total investments decreased slightly to $2.5 billion due to net repayment activities [40] - The average debt to equity ratio decreased from 0.99 times to 0.95 times [41] Business Line Data and Key Metrics Changes - The company committed $79.3 million and funded $52.8 million in Q1, primarily in the software services sector [26] - The weighted average yield on debt and income-producing securities increased to 10.3% from 10.2% quarter-over-quarter [36] - The weighted average revenue and EBITDA of core portfolio companies were $117 million and $31 million, respectively [38] Market Data and Key Metrics Changes - The S&P 500 and US High Yield Index ended Q1 down 4.5% and 4.6%, respectively, marking their worst quarter since Q1 2020 [21] - New issue loan volumes in the middle market were down 51% from a year ago [22] - The weighted average cost of debt outstanding remained relatively flat due to the mechanics of swap contracts [14] Company Strategy and Development Direction - The company is focused on investing in high-quality businesses and maintaining liquidity amid rising interest rates and inflation [12][15] - The company aims to provide differentiated capital solutions in a competitive direct lending landscape [35] - The company received a ratings upgrade from Fitch, reflecting strong performance and sector-leading returns [18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by inflation, rising interest rates, and geopolitical factors but expressed confidence in the portfolio's strength [12][15] - The company anticipates that rising interest rates will benefit its asset sensitivity, allowing for potential ROE accretion [44] - Management remains optimistic about future opportunities in the private lending market despite current volatility [56][57] Other Important Information - The Board approved a base quarterly dividend of $0.41 per share and a supplemental dividend of $0.04 per share [17] - The company has ample liquidity with $1.2 billion of unfunded revolver capacity against $147 million of unfunded commitments [41] Q&A Session Summary Question: Interest rates and private lending market reaction - Management discussed the impact of rising interest rates on spreads and the potential for the private lending market to react differently than in the past [61][62] Question: Expectations for convertible debt settlement - The company elected to settle the convertible debt primarily in stock, which is expected to be slightly accretive to net asset value [66][67] Question: Competition in the lending market - Management noted that while competition has not yet decreased, there are signs of potential shifts in the market due to recent economic changes [75][76] Question: Opportunities in growth equity - Management acknowledged ongoing opportunities in growth equity but emphasized the need for careful selection based on appropriateness for the company's balance sheet [85][86] Question: Market activity and repayment expectations - Management indicated that while repayment activity may normalize, it is not highly sensitive to interest rate changes, and they expect continued repayment activity [102][111]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from to Commission File Number 001-36364 Sixth Street Specialty Lending, Inc. FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. (Exact name of registrant as specified in its charter) For the quarterly period ended March 31, 2022 Delaware 27-3380000 (State or ...

Sixth Street Specialty Lending Inc. (NYSE:TSLX) Q4 2021 Earnings Conference Call February 18, 2021 8:30 AM ET Company Participants Joshua Easterly - Chairman, Chief Executive Officer Bo Stanley - President Ian Simmonds - Chief Financial Officer Cami VanHorn - Head of Investor Relations Conference Call Participants Finian O’Shea - Wells Fargo Securities Kevin Fultz - JMP Securities Melissa Wedel - JP Morgan Kenneth Lee - RBC Capital Markets Ryan Lynch - KBW Robert Dodd - Raymond James Operator Good morning ...