OFS Capital Corporation Announces First Quarter 2018 Financial Results
Declares a
Closed Investments of
FINANCIAL HIGHLIGHTS
-
Net investment income of
$3.8 million , or$0.29 per share, which includes$0.5 million , or$0.04 per share of expenses related to a debt transaction the Company elected not to pursue. -
Declared distributions of
$1.05 per share in the first half of 2018, including a$0.37 per share special dividend. -
Closed investments of
$98.2 million in first quarter of 2018. - 78% and 76% of the fair value of our loan portfolio was senior and floating rate, respectively, and the weighted average yield of our performing loan portfolio was 12.57% as of March 31, 2018(1).
-
100% of our debt is fixed rate with a weighted average cost of
approximately 4.30% as of
May 4, 2018 ; all maturities in 2022 through 2025. -
On
May 1, 2018 ,OFS Capital's Board of Directors declared a distribution of$0.34 per share for the second quarter of 2018, payable onJune 29, 2018 to stockholders of record as ofJune 22, 2018 .
"The first quarter of 2018 was a productive quarter and we believe
positions us for significant income growth beginning in the second
quarter," said Bilal Rashid, OFS Capital's Chairman and Chief Executive
Officer. "We deployed
(1) | See Highlights contained in this press release for further information on our weighted average yield. Including assets on non-accrual, the weighted average yield of our debt investment portfolio was 12.12% at March 31, 2018. | |
HIGHLIGHTS
($ in millions,
except for per share data)
Portfolio Overview | At March 31, 2018 | |||||
Total assets | $ | 374.7 | ||||
Investment portfolio, at fair value | $ | 335.5 | ||||
Net assets | $ | 182.5 | ||||
Net asset value per share | $ | 13.67 | ||||
Weighted average yield on performing debt investments (1) | 12.57 | % | ||||
Weighted average yield on total debt investments (2) | 12.12 | % | ||||
Weighted average yield on total investments (3) | 10.91 | % | ||||
(1) | The weighted average yield on our performing debt investments is computed as (a) the annual stated accruing interest on our debt investments at the balance sheet date, 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 our debt investments, excluding assets on non-accrual basis as of the balance sheet date. | |
(2) | The weighted average yield on our total debt investments is computed as (a) the annual stated accruing interest on our debt investments at the balance sheet date, 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 our debt investments, including assets on non-accrual basis as of the balance sheet date. | |
(3) | The weighted average yield on total investments is computed as (a) the annual stated accruing interest on our debt investments at the balance sheet date, plus the annualized accretion of loan origination fees, original issue discount, market discount or premium, and loan amendment fees, plus the effective cash yield on our performing preferred equity investments divided by (b) amortized cost of our total investment portfolio, including assets on non-accrual basis as of the balance sheet date. The weighted average yield of investments is not the same as a return on investment for our stockholders but, rather, relates to a portion of our investment portfolio and is calculated before the payment of all of our fees and expenses. | |
Quarter ended March 31, | ||||||||||
Operating Results | 2018 | 2017 | ||||||||
Total investment income | $ | 9.0 | $ | 8.0 | ||||||
Net investment income | $ | 3.8 | $ | 3.3 | ||||||
Net investment income per common share, basic and diluted | $ | 0.29 | $ | 0.34 | ||||||
Adjusted net investment income (a Non-GAAP measure |
$ | 3.8 | $ | 3.6 | ||||||
Adjusted net investment income (a Non-GAAP measure |
$ | 0.29 | $ | 0.37 | ||||||
Net increase in net assets resulting from osperations | $ | 3.5 | $ | 4.9 | ||||||
Quarter ended March 31, | |||||||||
Portfolio Activity | 2018 | 2017 | |||||||
Number of new portfolio companies | 7 | — | |||||||
Investments in new portfolio companies | $ | 73.0 | $ | — | |||||
Investments in existing portfolio companies | $ | 25.2 | $ | 6.1 | |||||
Number of portfolio companies at end of period | 39 | 38 | |||||||
PORTFOLIO AND INVESTMENT ACTIVITIES
During the first quarter of 2018,
The total fair value of OFS Capital’s investment portfolio was
RESULTS OF OPERATIONS
Income
Interest Income
Interest income increased by
Fee Income
Fee income decreased by
Expenses
Interest expense
Interest expense for the three months ended March 31, 2018 increased
over the corresponding period in the prior year due primarily to an
increase in borrowings under our revolving line of credit with
Management fee
Management fee expense for the three months ended March 31, 2018
increased
Incentive fee
Incentive fee expense decreased by
Administration fee
Administration fee expense for the three months ended March 31, 2018,
increased
Other expenses
Other expenses for the three months ended March 31, 2018, increased over the corresponding period in the prior year primarily due to legal and other offering costs incurred during the first quarter of 2018 in connection with a foreign debt transaction that we elected not to pursue due to regulatory changes and market conditions.
Net Gain (Loss) on Investments
We recognized net gains of
We recognized net losses of
We recognized net losses of
We recognized net gains of
LIQUIDITY AND CAPITAL RESOURCES
At
RECENT DEVELOPMENTS
Registered unsecured bond offering
In
Modified asset coverage
On
On
CONFERENCE CALL
INTERNET: Log on to www.ofscapital.com at least 15 minutes prior to the start time of the call to register, download, and install any necessary audio software. A replay will be available for 90 days on OFS Capital’s website at www.ofscapital.com.
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 first quarter ended
OFS Capital Corporation and Subsidiaries (Dollar amounts in thousands, except per share data) |
|||||||||||
March 31, 2018 |
December 31, 2017 |
||||||||||
(unaudited) | |||||||||||
Assets | |||||||||||
Investments, at fair value: | |||||||||||
Non-control/non-affiliate investments (amortized cost of $215,488 and $209,360, respectively) |
$ | 201,947 | $ | 197,374 | |||||||
Affiliate investments (amortized cost of $122,443 and $70,402, respectively) | 122,843 | 69,557 | |||||||||
Control investments (amortized cost of $10,244 and $10,213, respectively) | 10,674 | 10,568 | |||||||||
Total investments at fair value (amortized cost of $348,175 and $289,975, respectively) | 335,464 | 277,499 | |||||||||
Cash and cash equivalents | 31,926 | 72,952 | |||||||||
Interest receivable | 2,915 | 2,734 | |||||||||
Prepaid expenses and other assets | 4,396 | 4,593 | |||||||||
Total assets | $ | 374,701 | $ | 357,778 | |||||||
Liabilities | |||||||||||
Revolving line of credit | $ | 40,950 | $ | 17,600 | |||||||
SBA debentures (net of deferred debt issuance costs of $2,564 and $2,657, respectively) | 147,316 | 147,223 | |||||||||
Interest payable | 410 | 1,596 | |||||||||
Management and incentive fees payable | 2,075 | 1,987 | |||||||||
Administration fee payable | 749 | 476 | |||||||||
Accrued professional fees | 598 | 433 | |||||||||
Other liabilities | 150 | 127 | |||||||||
Total liabilities | 192,248 | 169,442 | |||||||||
Commitments and contingencies | |||||||||||
Net assets | |||||||||||
Preferred stock, par value of $0.01 per share, 2,000,000 shares authorized, -0- shares |
|||||||||||
issued and outstanding as of March 31, 2018, and December 31, 2017, respectively |
$ | — | $ | — | |||||||
Common stock, par value of $0.01 per share, 100,000,000 shares authorized, 13,348,774 |
|||||||||||
and 13,340,217 shares issued and outstanding as of March 31, 2018, and December |
|||||||||||
31, 2017, respectively |
133 | 133 | |||||||||
Paid-in capital in excess of par | 187,512 | 187,398 | |||||||||
Accumulated undistributed net investment income | 7,273 | 9,404 | |||||||||
Accumulated undistributed net realized gain | 258 | 3,881 | |||||||||
Net unrealized depreciation on investments | (12,723 | ) | (12,480 | ) | |||||||
Total net assets | 182,453 | 188,336 | |||||||||
Total liabilities and net assets | $ | 374,701 | $ | 357,778 | |||||||
Number of shares outstanding | 13,348,774 | 13,340,217 | |||||||||
Net asset value per share | $ | 13.67 | $ | 14.12 | |||||||
OFS Capital Corporation and Subsidiaries (Dollar amounts in thousands, except per share data) |
|||||||||||
Three Months Ended March 31, | |||||||||||
2018 | 2017 | ||||||||||
Investment income | |||||||||||
Interest income: | |||||||||||
Non-control/non-affiliate investments | $ | 5,758 | $ | 4,612 | |||||||
Affiliate investments | 2,085 | 1,831 | |||||||||
Control investment | 239 | 524 | |||||||||
Total interest income | 8,082 | 6,967 | |||||||||
Payment-in-kind interest and dividend income: | |||||||||||
Non-control/non-affiliate investments | 224 | 307 | |||||||||
Affiliate investments | 461 | 352 | |||||||||
Control investment | 27 | 38 | |||||||||
Total payment-in-kind interest and dividend income | 712 | 697 | |||||||||
Dividend income: | |||||||||||
Non-control/non-affiliate investments | — | 5 | |||||||||
Affiliate investments | 130 | 85 | |||||||||
Control investments | 33 | 33 | |||||||||
Total dividend income | 163 | 123 | |||||||||
Fee income: | |||||||||||
Non-control/non-affiliate investments | 26 | 156 | |||||||||
Affiliate investments | 2 | 58 | |||||||||
Control investments | 18 | 33 | |||||||||
Total fee income | 46 | 247 | |||||||||
Total investment income | 9,003 | 8,034 | |||||||||
Expenses | |||||||||||
Interest expense | 1,634 | 1,387 | |||||||||
Management fee | 1,360 | 1,192 | |||||||||
Incentive fee, net of fee waiver | 714 | 1,181 | |||||||||
Professional fee | 201 | 263 | |||||||||
Administration fee | 583 | 401 | |||||||||
Other expenses | 695 | 270 | |||||||||
Total expenses, net of incentive fee waiver | 5,187 | 4,694 | |||||||||
Net investment income | 3,816 | 3,340 | |||||||||
Net realized and unrealized gain (loss) on investments | |||||||||||
Net realized gain on non-control/non-affiliate investments | 461 | — | |||||||||
Net realized loss on affiliate investments | (541 | ) | — | ||||||||
Net unrealized depreciation on non-control/non-affiliate investments | (1,563 | ) | (3,041 | ) | |||||||
Net unrealized appreciation on affiliate investments | 1,245 | 4,024 | |||||||||
Net unrealized appreciation on control investment | 75 | 543 | |||||||||
Net gain (loss) on investments | (323 | ) | 1,526 | ||||||||
Net increase in net assets resulting from operations | $ | 3,493 | $ | 4,866 | |||||||
Net investment income per common share – basic and diluted | $ | 0.29 | $ | 0.34 | |||||||
Net increase in net assets resulting from operations per common share – basic and diluted | $ | 0.26 | $ | 0.50 | |||||||
Distributions declared per common share | $ | 0.71 | $ | 0.34 | |||||||
Basic and diluted weighted average shares outstanding | 13,340,502 | 9,700,329 | |||||||||
Non-GAAP Financial Measure – Adjusted Net Investment Income (“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 (fee adjustments) in periods in which they occur. Our management agreement with our investment adviser 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 March 31, | ||||||||||
2018 | 2017 | |||||||||
Net investment income | $ | 3,794 | $ | 3,340 | ||||||
Capital gains incentive fee | — | 283 | ||||||||
Adjusted net investment income | $ | 3,794 | $ | 3,623 | ||||||
Adjusted net investment income per common share: | ||||||||||
Basic and diluted | $ | 0.29 | $ | 0.37 | ||||||
Weighted average shares outstanding: | ||||||||||
Basic and diluted | 13,340,502 | 9,700,329 | ||||||||
ABOUT
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, net asset value and net
investment gains and losses and the factors that may affect such
results; OFS Capital’s expectations regarding income growth;
management's belief that its commitment to capital preservation and
strong long-term performance is enhanced by the alignment of interest of
View source version on businesswire.com: https://www.businesswire.com/news/home/20180504005180/en/
Source:
Investor Relations:
Steve Altebrando, 646-652-8473
saltebrando@ofsmanagement.com