OFS Capital Corporation Announces Second Quarter Financial Results
Declares a
FINANCIAL HIGHLIGHTS
-
Net investment income of
$4.3 million , or$0.33 per share. -
Adjusted net investment income of
$4.0 million , or$0.31 per share (1). - Closed investments totaled $66.1 million in the second quarter of 2017.
- As of August 4, 2017, we closed approximately $10.8 million of additional new investments during the third quarter of 2017.
- 76% of the fair value of our loan portfolio was floating rate, and the weighted average yield of our loan portfolio was 11.66% as of June 30, 2017 (2).
- 100% of our debt is fixed rate with a weighted average cost of 3.73% as of June 30, 2017; over 95% of our debt matures in 2022 and beyond.
-
On
August 1, 2017 ,OFS Capital's Board of Directors declared a distribution of$0.34 per share for the third quarter of 2017, payable onSeptember 29, 2017 to stockholders of record as ofSeptember 15, 2017 .
"We believe that we are well positioned to grow earnings given the
strength of our balance sheet," said Bilal Rashid, OFS
Capital's Chairman and Chief Executive Officer. "At the end of the first
quarter, we offered new shares of common stock resulting in
approximately $53.7 million raised through the common stock offering.
Since the offering, we closed
(1) Supplemental information regarding adjusted net
investment income:
On a supplemental basis, we disclose adjusted net investment income
("Adjusted NII") (including on a per share basis), which is a financial
measure calculated and presented on a basis of methodology other than in
accordance with generally accepted accounting principles of
(2) See Highlights contained in this press release for further
information on our weighted average yield. Including assets on non-
accrual, the weighted average yield of our debt investment portfolio was
11.04% at
HIGHLIGHTS
($ in millions,
except for per share data)
Portfolio Overview |
At |
|||||||||||||||||
Total assets | $ | 349.0 | ||||||||||||||||
Investment portfolio, at fair value | $ | 296.9 | ||||||||||||||||
Net assets | $ | 192.0 | ||||||||||||||||
Net asset value per share | $ | 14.40 | ||||||||||||||||
Weighted average yield (1) |
11.66 |
% |
|
(1) The weighted average yield on our debt investments is computed as
(a) the annual stated accruing interest plus the annualized accretion of
loan origination fees, original issue discount, market discount or
premium, and loan amendment fees, divided by (b) amortized cost of debt
investments, excluding assets on non-accrual basis as of the balance
sheet date. Including assets on non-accrual, the weighted average yield
of our debt investment portfolio was 11.04% at
Quarter ended |
||||||||||
Operating Results | 2017 | 2016 | ||||||||
Total investment income | $ | 8.0 | $ | 7.7 | ||||||
Net investment income | $ | 4.3 | $ | 3.5 | ||||||
Net investment income per common share, basic and diluted |
$ | 0.33 | $ | 0.36 | ||||||
Adjusted net investment income (a Non-GAAP measure |
$ | 4.0 | $ | 3.5 | ||||||
Adjusted net investment income (a Non-GAAP measure |
$ | 0.31 | $ | 0.36 | ||||||
Net increase in net assets resulting from operations | $ | (2.3 | ) | $ | 4.3 | |||||
Quarter ended |
||||||||||||||||||||||
Portfolio Activity | 2017 | 2016 | ||||||||||||||||||||
Number of new portfolio companies | 6 | 3 | ||||||||||||||||||||
Investments in new portfolio companies | $ | 59.1 | $ | 9.1 | ||||||||||||||||||
Investments in existing portfolio companies | $ | 7.0 | $ | 8.2 | ||||||||||||||||||
Number of portfolio companies at end of period | 42 | 37 | ||||||||||||||||||||
PORTFOLIO AND INVESTMENT ACTIVITIES
During the second quarter of 2017,
FOLLOW-ON PUBLIC OFFERING
In
RESULTS OF OPERATIONS
Income
Interest Income:
Interest income increased by
Fee Income:
Fee income decreased by
Expenses
Management fee expense for the three months ended
Incentive fee expense decreased by
General and administrative fee expenses increased by
Net gain (loss) on investments
Net gain (loss) on investments consists of the sum of: (a) realized gains and losses from the sale of debt or equity securities, or the redemption of equity securities; and (b) changes in net unrealized appreciation/depreciation on debt and equity investments. In the period in which a realized gain or loss is recognized, such gain or loss will generally be offset by the reversal of previously recognized unrealized appreciation or depreciation, and the net gain recognized in that period will generally be smaller. The unrealized appreciation or depreciation on debt securities is also reversed when those investments are redeemed or paid off prior to maturity. In such instances, the reversal of unrealized appreciation or depreciation will be reported as a net loss or gain, respectively, and may be partially offset by the acceleration of any premium or discount on the debt security in interest income and any prepayment fees on the debt security in fee income.
We recognized net losses of
We recognized net losses of
We recognized net losses of
We recognized net losses of
LIQUIDITY AND CAPITAL RESOURCES
At
CONFERENCE CALL
TELEPHONE: Dial (877) 510-7674 (Domestic) or (412) 902-4139
(International) approximately 15 minutes prior to the call. A telephone
replay of the conference call will be available through
For more detailed discussion of the financial and other information
included in this press release, please refer to OFS Capital's Form 10-Q
for the second quarter ended
FORWARD-LOOKING STATEMENTS
Statements in this press release regarding management's future
expectations, beliefs, intentions, goals, strategies, plans or
prospects, including statements relating to: OFS Capital's results of
operations, including net investment income, adjusted net investment
income, net asset value and net investment gains and losses and the
factors that may affect such results; management's belief that
|
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2017 |
2016 |
|||||||||||
(unaudited) | ||||||||||||
Assets | ||||||||||||
Investments, at fair value: | ||||||||||||
Non-control/non-affiliate investments (amortized cost of |
$ | 200,020 | $ | 173,219 | ||||||||
Affiliate investments (amortized cost of |
70,982 | 81,708 | ||||||||||
Control investments (amortized cost of |
25,906 | 26,700 | ||||||||||
Total investments at fair value (amortized cost of |
296,908 | 281,627 | ||||||||||
Cash and cash equivalents | 46,920 | 17,659 | ||||||||||
Interest receivable | 1,250 | 1,770 | ||||||||||
Prepaid expenses and other assets | 3,882 | 3,974 | ||||||||||
Total assets | $ | 348,960 | $ | 305,030 | ||||||||
Liabilities | ||||||||||||
Revolving line of credit | $ | 6,000 | $ | 9,500 | ||||||||
SBA debentures (net of deferred debt issuance costs of |
147,033 | 146,843 | ||||||||||
Interest payable | 1,596 | 1,599 | ||||||||||
Management and incentive fees payable | 1,484 | 2,119 | ||||||||||
Administration fee payable | 369 | 435 | ||||||||||
Accrued professional fees | 422 | 477 | ||||||||||
Other liabilities | 60 | 279 | ||||||||||
Total liabilities | 156,964 | 161,252 | ||||||||||
Commitments and Contingencies | ||||||||||||
Net assets | ||||||||||||
Preferred stock, par value of |
$ | — | $ | — | ||||||||
Common stock, par value of |
133 | 97 | ||||||||||
Paid-in capital in excess of par | 187,791 | 134,300 | ||||||||||
Accumulated undistributed net investment income | 6,888 | 6,731 | ||||||||||
Accumulated undistributed net realized gain | 972 | 330 | ||||||||||
Net unrealized appreciation (depreciation) on investments | (3,788 | ) | 2,320 | |||||||||
Total net assets | 191,996 | 143,778 | ||||||||||
Total liabilities and net assets | $ | 348,960 | $ | 305,030 | ||||||||
Number of shares outstanding | 13,331,655 | 9,700,297 | ||||||||||
Net asset value per share | $ | 14.40 | $ | 14.82 | ||||||||
|
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Three Months Ended |
Six Months Ended |
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2017 | 2016 | 2017 | 2016 | |||||||||||||||||
Investment income | ||||||||||||||||||||
Interest income: | ||||||||||||||||||||
Non-control/non-affiliate investments | $ | 4,681 | $ | 4,431 | $ | 9,522 | $ | 9,167 | ||||||||||||
Affiliate investments | 1,708 | 1,671 | 3,586 | 3,357 | ||||||||||||||||
Control investment | 581 | 490 | 1,143 | 831 | ||||||||||||||||
Total interest income | 6,970 | 6,592 | 14,251 | 13,355 | ||||||||||||||||
Dividend income: | ||||||||||||||||||||
Non-control/non-affiliate investments | 129 | 134 | 212 | 162 | ||||||||||||||||
Affiliate investments | 312 | 294 | 702 | 823 | ||||||||||||||||
Control investments | 137 | 111 | 170 | 111 | ||||||||||||||||
Total dividend income | 578 | 539 | 1,084 | 1,096 | ||||||||||||||||
Fee income: | ||||||||||||||||||||
Non-control/non-affiliate investments | 169 | 517 | 325 | 995 | ||||||||||||||||
Affiliate investments | 176 | 7 | 234 | 39 | ||||||||||||||||
Control investments | 85 | 28 | 118 | 41 | ||||||||||||||||
Total fee income | 430 | 552 | 677 | 1,075 | ||||||||||||||||
Total investment income | 7,978 | 7,683 | 16,012 | 15,526 | ||||||||||||||||
Expenses | ||||||||||||||||||||
Interest expense | 1,339 | 1,308 | 2,726 | 2,616 | ||||||||||||||||
Management fees | 1,224 | 1,089 | 2,416 | 2,204 | ||||||||||||||||
Incentive fee | (22 | ) | 857 | 1,159 | 1,590 | |||||||||||||||
Professional fees | 293 | 303 | 556 | 617 | ||||||||||||||||
Administration fee | 307 | 326 | 708 | 754 | ||||||||||||||||
General and administrative expenses | 521 | 343 | 791 | 633 | ||||||||||||||||
Total expenses | 3,662 | 4,226 | 8,356 | 8,414 | ||||||||||||||||
Net investment income | 4,316 | 3,457 | 7,656 | 7,112 | ||||||||||||||||
Net realized and unrealized gain (loss) on investments |
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Net realized gain on non-control/non-affiliate |
163 | — | 163 | 2,566 | ||||||||||||||||
Net realized gain on affiliate investments | 874 | — | 874 | — | ||||||||||||||||
Net change in unrealized appreciation/depreciation on |
(5,505 | ) | 962 | (8,546 | ) | (3,130 | ) | |||||||||||||
Net change in unrealized appreciation/depreciation on |
(3,366 | ) | 296 | 658 | 442 | |||||||||||||||
Net change in unrealized appreciation/depreciation on |
1,237 | (377 | ) | 1,780 | (373 | ) | ||||||||||||||
Net gain (loss) on investments | (6,597 | ) | 881 | (5,071 | ) | (495 | ) | |||||||||||||
Net increase (decrease) in net assets resulting from |
$ | (2,281 | ) | $ | 4,338 | $ | 2,585 | $ | 6,617 | |||||||||||
Net investment income per common share - basic and |
$ | 0.33 | $ | 0.36 | $ | 0.67 | $ | 0.73 | ||||||||||||
Net increase (decrease) in net assets resulting from |
$ | (0.17 | ) | $ | 0.45 | $ | 0.23 | $ | 0.68 | |||||||||||
Distributions declared per common share | $ | 0.34 | $ | 0.34 | $ | 0.68 | $ | 0.68 | ||||||||||||
Basic and diluted weighted average shares outstanding | 13,197,759 | 9,692,346 | 11,458,706 | 9,691,764 | ||||||||||||||||
Schedule I
Non-GAAP Financial Measure - Adjusted NII
On a supplemental basis, we disclose Adjusted NII (including on a per share basis), which is a financial measure calculated and presented on a non-GAAP basis. Adjusted NII represents net investment income excluding the net capital gains incentive fee in periods in which they occur, including the effect of reversals of previously accrued capital gains incentive fees. Our management agreement with OFS Advisor provides that a capital gains incentive fee is determined and paid annually with respect to realized capital gains (but not unrealized capital gains) to the extent such realized capital gains exceed realized and unrealized capital losses for such year. Management believes that Adjusted NII is a useful indicator of operations exclusive of any net capital gains incentive fee, as net investment income does not include gains associated with the capital gains incentive fee. In addition, management believes that providing Adjusted NII may facilitate a more complete analysis and greater transparency into OFS Capital's ongoing operations, particularly in comparing underlying results from period to period, and afford investors a view of results that may be more easily compared to those of other companies.
The following table provides a reconciliation from net investment income (the most comparable GAAP measure) to Adjusted NII for the periods presented (dollar amounts in thousands, except per share data):
Quarter ended |
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2017 | 2016 | |||||||
Net investment income | $ | 4,316 | $ | 3,457 | ||||
Capital gains incentive fee | (283) |
(1) |
— | |||||
Adjusted net investment income | $ | 4,033 | $ | 3,457 | ||||
Adjusted net investment income per common share: | ||||||||
Basic and diluted | $ | 0.31 | $ | 0.36 | ||||
Weighted average shares outstanding: | ||||||||
Basic and diluted | 13,197,759 | 9,692,346 | ||||||
(1) Represents the reversal of accrued capital gains incentive fees at
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