OFS Capital Corporation Announces Fourth Quarter and Full Year 2016 Financial Results
Declares a
Fourth Quarter Net Investment Income of
FINANCIAL HIGHLIGHTS
-
Fourth quarter net investment income of
$3.7 million , or$0.39 per share—an increase of 13% from the third quarter and above the fourth quarter$0.34 per share distribution. -
Net investment income for the year ended
December 31, 2016 was 107% of the aggregate distribution during 2016 and quarterly net investment income covered the distribution in each quarter. -
Net asset value ("NAV") per share increased to
$14.82 atDecember 31, 2016 from$14.67 per share atSeptember 30, 2016 and there were no cash non-accruals. -
Two-thirds of our loan portfolio was floating rate and the weighted
average yield of our loan portfolio was 12.08% as of
December 31, 2016 . -
100% of our debt is fixed rate with a weighted average cost of 3.60%
as of
December 31, 2016 ; 94% of our debt matures in 2022 and beyond. -
Closed investments totaled
$28.1 million in the fourth quarter of 2016. -
On
March 9, 2017 ,OFS Capital's Board of Directors declared a distribution of$0.34 per share for the first quarter of 2017, payable onMarch 31, 2017 to shareholders of record as ofMarch 17, 2017 .
"Reflecting on 2016, we are pleased that our net investment income
continues to significantly exceed our distribution and our NAV remains
stable. Looking ahead, we believe we are well positioned for a potential
increase in interest rates. And, overall, we are proud of the total
return we have generated since our initial public offering in late 2012,
over which time, we have declared more than
HIGHLIGHTS ($ in millions, except for per share data) |
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Portfolio Overview |
At |
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Total assets | $ | 305.0 | ||
Investment portfolio, at fair value | $ | 281.6 | ||
Net assets | $ | 143.8 | ||
Net asset value per share | $ | 14.82 | ||
Weighted average yield (1) | 12.08 | % |
(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 excluding assets on non-accrual basis as of the balance sheet date.
Quarter Ended |
Year Ended |
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Operating Results | 2016 | 2015 | 2016 | 2015 | |||||||||||
Total investment income | $ | 8.2 | $ | 8.9 | $ | 31.1 | $ | 32.3 | |||||||
Net investment income | $ | 3.7 | $ | 4.3 | $ | 14.1 | $ | 13.4 | |||||||
Net investment income per common share, basic and
diluted |
$ | 0.39 | $ | 0.44 | $ | 1.46 | $ | 1.39 | |||||||
Adjusted net investment income (a Non-GAAP measure
described below) |
$ | 3.7 | $ | 4.4 | $ | 14.0 | $ | 14.3 | |||||||
Adjusted net investment income (a Non-GAAP measure
described below) per share, basic and diluted |
$ | 0.39 | $ | 0.46 | $ | 1.44 | $ | 1.47 | |||||||
Net increase in net assets resulting from operations | $ | 4.8 | $ | 6.2 | $ | 13.8 | $ | 18.2 | |||||||
Quarter Ended |
Year Ended |
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Portfolio Activity | 2016 | 2015 | 2016 | 2015 | ||||||||
Number of new portfolio companies | 3 | 5 | 8 | 14 | ||||||||
Investments in new portfolio companies | $ | 26.1 | $ | 42.4 | $ | 49.4 | $ | 78.7 | ||||
Investments in existing portfolio companies | $ | 2.0 | $ | — | $ | 18.8 | $ | 45.3 | ||||
Number of portfolio companies at end of period | 41 | 39 | 41 | 39 | ||||||||
PORTFOLIO AND INVESTMENT ACTIVITIES
During the fourth quarter of 2016,
The total fair value of OFS Capital's investment portfolio was
RESULTS OF OPERATIONS
Interest Income:
Interest income decreased
Dividend Income:
Preferred equity cash and PIK dividend income increased approximately
Fee Income:
Fee income decreased
Expenses
Interest expense decreased by
Management fee expense decreased by
Incentive fee expense increased by
Administrative fee expense decreased 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 on 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 changed the primary method used to value certain of our investments
as of
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
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-K
for the year ended
Consolidated Balance Sheets (Dollar amounts in thousands, except per share data) |
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2016 | 2015 | ||||||||||
Assets | |||||||||||
Investments, at fair value | |||||||||||
Non-control/non-affiliate investments (amortized cost of |
$ | 173,219 | $ | 177,290 | |||||||
Affiliate investments (amortized cost of |
81,708 | 66,393 | |||||||||
Control investments (amortized cost of |
26,700 | 13,613 | |||||||||
Total investments at fair value (amortized cost of |
281,627 | 257,296 | |||||||||
Cash and cash equivalents | 17,659 | 32,714 | |||||||||
Interest receivable | 1,770 | 789 | |||||||||
Prepaid expenses and other assets | 3,974 | 3,877 | |||||||||
Total assets | $ | 305,030 | $ | 294,676 | |||||||
Liabilities | |||||||||||
SBA debentures (net of deferred debt issuance costs of |
$ | 146,843 | $ | 146,460 | |||||||
Revolving line of credit | 9,500 | — | |||||||||
Interest payable | 1,599 | 1,548 | |||||||||
Management and incentive fees payable | 2,119 | 2,238 | |||||||||
Administration fee payable | 435 | 488 | |||||||||
Accrued professional fees | 477 | 433 | |||||||||
Other liabilities | 279 | 497 | |||||||||
Total liabilities | 161,252 | 151,664 | |||||||||
Commitments and Contingencies | |||||||||||
Net Assets | |||||||||||
Preferred stock, par value of |
$ | — | $ | — | |||||||
Common stock, par value of |
97 | 97 | |||||||||
Paid-in capital in excess of par | 134,300 | 134,446 | |||||||||
Accumulated undistributed net investment income | 6,731 | 4,612 | |||||||||
Accumulated undistributed net realized gain (loss) | 330 | (1,184 | ) | ||||||||
Net unrealized appreciation on investments | 2,320 | 5,041 | |||||||||
Total net assets | 143,778 | 143,012 | |||||||||
Total liabilities and net assets | $ | 305,030 | $ | 294,676 | |||||||
Number of shares outstanding | 9,700,297 | 9,691,170 | |||||||||
Net asset value per share | $ | 14.82 | $ | 14.76 | |||||||
Condensed Consolidated Statements of Operations (Dollar amounts in thousands, except per share data) |
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Quarter Ended |
Year Ended |
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2016 | 2015 | 2016 | 2015 | ||||||||||||||
Investment income | |||||||||||||||||
Interest income | 7,659 | 7,589 | 27,594 | 28,970 | |||||||||||||
Dividend income | 284 | 12 | 1,908 | 1,361 | |||||||||||||
Fee income | 266 | 1,272 | 1,592 | 1,933 | |||||||||||||
Total investment income | 8,209 | 8,873 | 31,094 | 32,264 | |||||||||||||
Expenses | |||||||||||||||||
Interest expense | 1,366 | 1,313 | 5,302 | 5,313 | |||||||||||||
Write-of of deferred debt issuance costs | — | — | — | 1,646 | |||||||||||||
Management fees | 1,192 | 1,124 | 4,516 | 5,225 | |||||||||||||
Incentive fee | 926 | 1,113 | 3,333 | 2,627 | |||||||||||||
Professional fees | 323 | 257 | 1,200 | 1,114 | |||||||||||||
Administration fee | 295 | 489 | 1,304 | 1,637 | |||||||||||||
General and administrative expenses | 371 | 297 | 1,294 | 1,291 | |||||||||||||
Total expenses | 4,473 | 4,593 | 16,949 | 18,853 | |||||||||||||
Net investment income | 3,736 | 4,280 | 14,145 | 13,411 | |||||||||||||
Net gain on investments | 1,087 | 1,896 | (317 | ) | 4,820 | ||||||||||||
Net increase in net assets resulting from operations | $ | 4,823 | $ | 6,176 | $ | 13,828 | $ | 18,231 | |||||||||
Net investment income per common share - basic and diluted | $ | 0.39 | $ | 0.44 | $ | 1.46 | $ | 1.39 | |||||||||
Net increase in net assets resulting from operations per common share - basic and diluted | $ | 0.50 | $ | 0.64 | $ | 1.43 | $ | 1.89 | |||||||||
Dividends and distributions declared per common share | $ | 0.34 | $ | 0.34 | $ | 1.36 | $ | 1.36 | |||||||||
Basic and diluted weighted average shares outstanding | 9,697,277 | 9,690,140 | 9,692,634 | 9,670,153 | |||||||||||||
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
basis of methodology other than in accordance with generally accepted
accounting principles of
The following table provides a reconciliation from net investment income (the most comparable GAAP measure) to Adjusted NII for the periods presented:
Quarter Ended |
Year Ended |
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2016 | 2015 | 2016 | 2015 | |||||||||||||
(Dollar amounts in thousands, except per share data) | ||||||||||||||||
Net investment income | $ | 3,736 | $ | 4,280 | $ | 14,145 | $ | 13,411 | ||||||||
Write-off of deferred financing closing costs | — | — | — | 1,646 | ||||||||||||
Incentive fee | — | — | — | (945 | ) | |||||||||||
Write-off of deferred financing closing costs, net | — | — | — | 701 | ||||||||||||
Capital gains incentive fee | — | 139 | (139 | ) | 139 | |||||||||||
Adjusted net investment income | $ | 3,736 | $ | 4,419 | $ | 14,006 | $ | 14,251 | ||||||||
Adjusted net investment income per common share: | ||||||||||||||||
Basic and diluted | $ | 0.39 | $ | 0.46 | $ | 1.44 | $ | 1.47 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic and diluted | 9,697,277 | 9,690,140 | 9,700,297 | 9,670,153 | ||||||||||||
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 performance in a rising
interest rate environment; 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
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INVESTOR RELATIONS:
saltebrando@ofsmanagement.com
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