OFS Capital Corporation Announces First Quarter 2023 Financial Results
Declares Second Quarter Distribution of
FIRST QUARTER FINANCIAL HIGHLIGHTS
-
Net investment income of
$0.37 per common share for the quarter endedMarch 31, 2023 , an increase from$0.35 per common share for the quarter endedDecember 31, 2022 . -
Net loss on investments of
$0.09 per common share, primarily comprised of unrealized losses; there were no new non-accrual loans. -
Net asset value (“NAV”) per common share decreased from
$13.47 atDecember 31, 2022 to$13.42 atMarch 31, 2023 . -
As of
March 31, 2023 , based on fair value, 94% of our loan portfolio consisted of floating rate loans and approximately 99% of our loan portfolio consisted of senior secured loans. -
For the quarter ended
March 31, 2023 , the investment portfolio’s weighted-average performing income yield increased to 13.0% from 12.7% during the prior quarter. -
On
March 31, 2023 , we paid a quarterly distribution of$0.33 per common share and onMay 2, 2023 , our Board of Directors declared a distribution of$0.33 per common share for the second quarter of 2023, payable onJune 30, 2023 to stockholders of record as ofJune 23, 2023 .
SELECTED FINANCIAL HIGHLIGHTS (unaudited) |
Quarter Ended |
||||||
(Per common share) |
|
|
|
||||
Net Investment Income |
|
|
|
||||
Net investment income |
$ |
0.37 |
|
|
$ |
0.35 |
|
|
|
|
|
||||
Net Realized/Unrealized Gain (Loss) |
|
|
|
||||
Net realized loss on investments(1) |
$ |
— |
|
|
$ |
(0.09 |
) |
Net unrealized loss on investments |
|
(0.09 |
) |
|
|
(0.08 |
) |
Net loss on investments |
$ |
(0.09 |
) |
|
$ |
(0.17 |
) |
|
|
|
|
||||
Earnings (Loss) |
|
|
|
||||
Earnings (loss) |
$ |
0.28 |
|
|
$ |
0.18 |
|
|
|
|
|
||||
Net Asset Value |
|
|
|
||||
Net asset value |
$ |
13.42 |
|
|
$ |
13.47 |
|
Distributions paid |
$ |
0.33 |
|
|
$ |
0.30 |
|
|
|
|
|
|
As of |
||||
(in millions) |
|
|
|
||
Balance Sheet Highlights |
(unaudited) |
|
|
||
Investment portfolio, at fair value |
$ |
499.8 |
|
$ |
500.6 |
Total assets |
|
515.5 |
|
|
520.7 |
Net assets |
|
179.8 |
|
|
180.4 |
(1) |
For the quarter ended |
“We are pleased to announce another increase in our quarterly net investment income. We expect to continue to see the benefits of our positioning in this rising interest rate environment with the vast majority of our loan portfolio being floating rate and the majority of our debt being fixed-rate,” said
PORTFOLIO AND INVESTMENT ACTIVITIES ($ in millions) |
||||||||
|
|
As of and for the Quarter Ended |
||||||
Portfolio Overview |
|
|
|
|
||||
Average interest-bearing investments, at cost |
|
$ |
410.0 |
|
|
$ |
422.7 |
|
Weighted-average performing income yield - interest-bearing investments(2) |
|
|
13.0 |
% |
|
|
12.7 |
% |
Weighted-average realized yield - interest-bearing investments(3) |
|
|
11.8 |
% |
|
|
11.7 |
% |
The weighted-average yield of our investments is not the same as a return on investment for our stockholders, but rather relates to our investment portfolio and is calculated before the payment of all of our fees and expenses.
(2) |
Performing income yield is calculated as (a) the actual amount earned on performing interest-bearing investments, including interest, prepayment fees and amortization of net loan fees, divided by (b) the weighted-average of total performing interest-bearing investments at amortized cost. |
|
(3) |
Realized yield is calculated as (a) the actual amount earned on interest-bearing investments, including interest, prepayment fees and amortization of net loan fees, divided by (b) the weighted-average of total interest-bearing investments at amortized cost, in each case, including debt investments on non-accrual status and non-income producing structured finance securities. |
|
|
Quarter Ended |
||||
Portfolio Activity |
|
|
|
|
||
Investments in debt and equity investments |
|
$ |
9.9 |
|
$ |
9.3 |
Investments in structured finance securities |
|
|
— |
|
|
— |
As of
-
Total investments of
$499.8 million , which was equal to approximately 105% of amortized cost; -
Debt investments of
$309.9 million in 47 portfolio companies; -
Equity investments of
$102.8 million in 17 portfolio companies; -
Structured finance securities of
$87.0 million in 23 investments; and -
Unfunded commitments of
$21.3 million to 12 portfolio companies.
During the quarter ended
RESULTS OF OPERATIONS
Investment Income
For the quarter ended
Expenses
For the quarter ended
For the quarter ended
LIQUIDITY AND CAPITAL RESOURCES
As of
As of
CONFERENCE CALL
INTERNET: Go 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 (844) 763-8274 (Domestic) or (412) 717-9224 (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
Consolidated Statements of Assets and Liabilities (Dollar amounts in thousands, except per share data) |
|||||||
|
|
|
|
||||
|
(unaudited) |
|
|
||||
Assets |
|
|
|
||||
Total investments, at fair value (amortized cost of |
$ |
499,759 |
|
|
$ |
500,576 |
|
Cash |
|
10,773 |
|
|
|
14,937 |
|
Interest receivable |
|
2,201 |
|
|
|
2,202 |
|
Prepaid expenses and other assets |
|
2,750 |
|
|
|
3,002 |
|
Total assets |
$ |
515,483 |
|
|
$ |
520,717 |
|
|
|
|
|
||||
Liabilities |
|
|
|
||||
Revolving lines of credit |
$ |
106,000 |
|
|
$ |
104,700 |
|
SBA debentures (net of deferred debt issuance costs of |
|
45,762 |
|
|
|
50,697 |
|
Unsecured notes (net of deferred debt issuance costs of |
|
176,598 |
|
|
|
176,353 |
|
Interest payable |
|
2,104 |
|
|
|
3,947 |
|
Payable to adviser and affiliates |
|
4,025 |
|
|
|
3,909 |
|
Accrued professional fees |
|
419 |
|
|
|
444 |
|
Other liabilities |
|
767 |
|
|
|
244 |
|
Total liabilities |
|
335,675 |
|
|
|
340,294 |
|
|
|
|
|
||||
|
|
|
|
||||
Net assets |
|
|
|
||||
Preferred stock, par value of |
$ |
— |
|
|
$ |
— |
|
Common stock, par value of |
|
134 |
|
|
|
134 |
|
Paid-in capital in excess of par |
|
184,841 |
|
|
|
184,841 |
|
Total distributable earnings (losses) |
|
(5,167 |
) |
|
|
(4,552 |
) |
Total net assets |
|
179,808 |
|
|
|
180,423 |
|
|
|
|
|
||||
Total liabilities and net assets |
$ |
515,483 |
|
|
$ |
520,717 |
|
|
|
|
|
||||
Number of shares outstanding |
|
13,398,078 |
|
|
|
13,398,078 |
|
Net asset value per share |
$ |
13.42 |
|
|
$ |
13.47 |
|
Consolidated Statements of Operations (unaudited) (Dollar amounts in thousands, except per share data) |
||||||||
|
|
Three Months Ended |
||||||
|
|
2023 |
|
2022 |
||||
Investment income |
|
|
|
|
||||
Interest income |
|
$ |
13,393 |
|
|
$ |
9,788 |
|
Dividend income |
|
|
785 |
|
|
|
758 |
|
Fee income |
|
|
105 |
|
|
|
400 |
|
Total investment income |
|
|
14,283 |
|
|
|
10,946 |
|
Expenses |
|
|
|
|
||||
Interest expense |
|
|
4,874 |
|
|
|
3,624 |
|
Management fee |
|
|
1,894 |
|
|
|
2,020 |
|
Income Incentive Fee |
|
|
1,238 |
|
|
|
— |
|
Capital Gains Fee |
|
|
— |
|
|
|
1,072 |
|
Professional fees |
|
|
436 |
|
|
|
407 |
|
Administration fee |
|
|
482 |
|
|
|
451 |
|
Other expenses |
|
|
409 |
|
|
|
367 |
|
Total expenses |
|
|
9,333 |
|
|
|
7,941 |
|
Net investment income |
|
|
4,950 |
|
|
|
3,005 |
|
Net realized and unrealized gain (loss) on investments |
|
|
|
|
||||
Net realized gain (loss), net of taxes |
|
|
(4 |
) |
|
|
217 |
|
Net unrealized gain (loss), net of taxes |
|
|
(1,121 |
) |
|
|
5,283 |
|
Net gain (loss) on investments |
|
|
(1,125 |
) |
|
|
5,500 |
|
Loss on extinguishment of debt |
|
|
(19 |
) |
|
|
(144 |
) |
Net increase in net assets resulting from operations |
|
$ |
3,806 |
|
|
$ |
8,361 |
|
Net investment income per common share – basic and diluted |
|
$ |
0.37 |
|
|
$ |
0.22 |
|
Net increase in net assets resulting from operations per common share – basic and diluted |
|
$ |
0.28 |
|
|
$ |
0.62 |
|
Distributions declared per common share |
|
$ |
0.33 |
|
|
$ |
0.28 |
|
Basic and diluted weighted average shares outstanding |
|
|
13,398,078 |
|
|
|
13,422,447 |
|
ABOUT
The Company is an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a business development company. The Company's investment objective is to provide stockholders with both current income and capital appreciation primarily through debt investments and, to a lesser extent, equity investments. The Company invests primarily in privately held middle-market companies in
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 regarding the performance of the Company’s portfolio; management's belief that the Company is well positioned in a rising interest rate environment due to a high percentage of floating rate loans in the portfolio and a majority of liabilities that have a fixed rate of interest, when there can be no assurance that such a composition will lead to future success; and other factors may constitute forward-looking statements for purposes of the safe harbor protection under applicable securities laws. Forward-looking statements can be identified by terminology such as “anticipate,” “believe,” “could,” “could increase the likelihood,” “estimate,” “expect,” “intend,” “is planned,” “may,” “should,” “will,” “will enable,” “would be expected,” “look forward,” “may provide,” “would” or similar terms, variations of such terms or the negative of those terms. Such forward-looking statements involve known and unknown risks, uncertainties and other factors including those risks, uncertainties and factors referred to in OFS Capital’s Annual Report on Form 10-K for the year ended
(4) Registration does not imply a certain level of skill or training
Schedule 1
Non-GAAP Financial Measure – 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 basis other than in accordance with GAAP. Adjusted NII represents net investment income, excluding the capital gains incentive fee, in periods in which such expense occurs. GAAP requires recognition of a capital gains incentive fee in our financial statements when aggregate net realized and unrealized capital gains, if any, on a cumulative basis is positive from the date of the election to be a BDC through the reporting date. Such fees are subject to further conditions specified in the investment advisory agreement with
The following table provides a reconciliation from net investment income (the most comparable GAAP measure) to Adjusted NII for the quarters ended
|
Quarter Ended |
|
Three Months Ended |
||||||||||||||||||||
|
|
|
|
|
2023 |
|
2022 |
||||||||||||||||
|
(000's) |
|
Per Share |
|
(000's) |
|
Per Share |
|
(000's) |
|
Per Share |
|
(000's) |
|
Per Share |
||||||||
Net investment income |
$ |
4,950 |
|
$ |
0.37 |
|
$ |
4,726 |
|
$ |
0.35 |
|
$ |
4,950 |
|
$ |
0.37 |
|
$ |
3,005 |
|
$ |
0.22 |
Capital gains incentive fee accrual |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,072 |
|
|
0.08 |
Adjusted NII |
$ |
4,950 |
|
$ |
0.37 |
|
$ |
4,726 |
|
$ |
0.35 |
|
$ |
4,950 |
|
$ |
0.37 |
|
$ |
4,077 |
|
$ |
0.30 |
Although these non-GAAP financial measures are intended to enhance investors’ understanding of our business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230504005993/en/
INVESTOR RELATIONS CONTACT:
646-652-8473
saltebrando@ofsmanagement.com
Source: