OFS Capital Corporation Announces Fourth Quarter and Full Year 2018 Financial Results
Fourth Quarter Net Investment Income of
Paid
Paid
FINANCIAL HIGHLIGHTS
-
Fourth quarter net investment income of
$5.3 million , or$0.40 per common share - an increase of 38% year-over-year and above the$0.34 quarterly distribution. -
Full year 2018 net investment income of
$18.4 million , or$1.38 per common share - an increase of 8% year-over-year and above the$1.36 regular distribution. -
Paid
$1.73 per share in distributions in 2018, inclusive of a$0.37 special distribution. -
Closed investments in the fourth quarter of approximately
$79.6 million . -
Net asset value ("NAV") per share decreased to
$13.10 atDecember 31, 2018 from$13.75 atSeptember 30, 2018 due to unrealized depreciation of the portfolio. No new non-accruals. -
At
December 31, 2018 , 88% of our loan portfolio consisted of senior secured loans, based on fair value. -
On
March 5, 2019, OFS Capital's Board of Directors declared a distribution of$0.34 per share for the first quarter of 2019, payable onMarch 29, 2019 to stockholders of record as ofMarch 22, 2019 .
"Our net investment income again exceeded our distribution," said
“We believe that the breadth and expertise of our advisor puts us in a
strong position to benefit from the increase in the leverage allowance
for BDCs and enhance our net investment income. Our commitment to
capital preservation, and strong long-term performance is enhanced by
the alignment of interests of our stockholders and our advisor, which
owns approximately 22% of the outstanding
HIGHLIGHTS
($ in millions, except for per share data)
Portfolio Overview | At December 31, 2018 | |||||
Total assets | $ | 441.4 | ||||
Investment portfolio, at fair value | $ | 396.8 | ||||
Net assets | $ | 175.0 | ||||
Net asset value per share | $ | 13.10 | ||||
Weighted average yield on performing debt investments (1) | 11.50 | % | ||||
Weighted average yield on total debt investments (2) | 11.12 | % | ||||
Weighted average yield on total investments (3) | 10.49 | % | ||||
(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 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 December 31, | Year Ended December 31, | ||||||||||||||||||||||
Operating Results | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
Total investment income | $ | 12.6 | $ | 8.3 | $ | 42.8 | $ | 33.4 | |||||||||||||||
Net investment income | $ | 5.3 | $ | 3.8 | $ | 18.4 | $ | 15.9 | |||||||||||||||
Net investment income per common share, basic and
diluted |
$ | 0.40 | $ | 0.29 | $ | 1.38 | $ | 1.28 | |||||||||||||||
Net increase in net assets resulting from operations | $ | (4.1 | ) | $ | 4.2 | $ | 9.6 | $ | 7.9 |
Quarter Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
Portfolio Activity | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||
Number of new portfolio companies | 8 | 4 | 28 | 17 | |||||||||||||||||||
Investments in new portfolio companies | $ | 45.7 | $ | 19.3 | $ | 201.1 | $ | 118.9 | |||||||||||||||
Investments in existing portfolio companies | $ | 33.9 | $ | 9.0 | $ | 71.1 | $ | 24.0 | |||||||||||||||
Number of portfolio companies at end of period | 50 | 37 | 50 | 37 | |||||||||||||||||||
PORTFOLIO AND INVESTMENT ACTIVITIES
During the fourth quarter of 2018, we closed nine senior secured debt
investments in eight new portfolio companies totaling
The total fair value of our investment portfolio was
RESULTS OF OPERATIONS
Income
Interest Income
Interest income increased approximately
Fee Income
We recorded prepayment fees of
Expenses
Interest expense
Interest expense increased by
Management Fees
Management fee expense increased by
Incentive Fees
Incentive fee expense increased by
Net Gain (Loss) on Investments
We recognized net losses of
We recognized net losses of
We recognized net losses of
We recognized net gains of
LIQUIDITY AND CAPITAL RESOURCES
At
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-K
for the year ended
Condensed Consolidated Statements of Assets and Liabilities
(Dollar
amounts in thousands, except per share data)
December 31, | |||||||||||
2018 | 2017 | ||||||||||
Assets | |||||||||||
Investments, at fair value | |||||||||||
Non-control/non-affiliate investments (amortized cost of $312,223 and $209,360, respectively) | $ | 297,749 | $ | 197,374 | |||||||
Affiliate investments (amortized cost of $90,751 and $70,402, respectively) | 89,103 | 69,557 | |||||||||
Control investment (amortized cost of $10,337 and $10,213, respectively) | 9,945 | 10,568 | |||||||||
Total investments at fair value (amortized cost of $413,311 and $289,975, respectively) | 396,797 | 277,499 | |||||||||
Cash and cash equivalents | 38,172 | 72,952 | |||||||||
Interest receivable | 2,787 | 2,734 | |||||||||
Prepaid expenses and other assets | 3,665 | 4,593 | |||||||||
Total assets | $ | 441,421 | $ | 357,778 | |||||||
Liabilities | |||||||||||
Revolving line of credit | $ | 12,000 | $ | 17,600 | |||||||
SBA debentures (net of deferred debt issuance costs of $2,280 and 2,657, respectively) | 147,600 | 147,223 | |||||||||
Unsecured notes (net of discounts and deferred debt issuance costs of $3,299 and $0, respectively) | 95,226 | — | |||||||||
Interest payable | 2,791 | 1,596 | |||||||||
Payable to investment adviser and affiliates | 3,700 | 2,463 | |||||||||
Payable for investments purchased | 4,151 | — | |||||||||
Accrued professional fees | 637 | 433 | |||||||||
Other liabilities | 293 | 127 | |||||||||
Total liabilities | 266,398 | 169,442 | |||||||||
Commitments and contingencies | |||||||||||
Total net assets | 175,023 | 188,336 | |||||||||
Total liabilities and net assets | $ | 441,421 | $ | 357,778 | |||||||
Number of shares outstanding | 13,357,337 | 13,340,217 | |||||||||
Net asset value per share | $ | 13.10 | $ | 14.12 | |||||||
Consolidated Statements of Operations
(Dollar amounts in
thousands, except per share data)
Quarter Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||
Investment income | ||||||||||||||||||||||||
Interest income: | ||||||||||||||||||||||||
Non-control/non-affiliate investments | $ | 8,039 | $ | 5,534 | $ | 27,547 | $ | 20,078 | ||||||||||||||||
Affiliate investments | 2,747 | 1,417 | 10,055 | 6,506 | ||||||||||||||||||||
Control investment | 261 | 238 | 1,005 | 1,540 | ||||||||||||||||||||
Total interest income | 11,047 | 7,189 | 38,607 | 28,124 | ||||||||||||||||||||
Payment-in-kind interest and dividend income: | ||||||||||||||||||||||||
Non-control/non-affiliate investments | 144 | 424 | 668 | 1,400 | ||||||||||||||||||||
Affiliate investments | 267 | 256 | 1,321 | 1,375 | ||||||||||||||||||||
Control investment | 28 | 28 | 110 | 132 | ||||||||||||||||||||
Total payment-in-kind interest and dividend income: | 439 | 708 | 2,099 | 2,907 | ||||||||||||||||||||
Dividend income: | ||||||||||||||||||||||||
Non-control/non-affiliate investments | — | — | — | 50 | ||||||||||||||||||||
Affiliate investments | — | 22 | 130 | 140 | ||||||||||||||||||||
Control investment | — | 30 | 185 | 292 | ||||||||||||||||||||
Total dividend income | — | 52 | 315 | 482 | ||||||||||||||||||||
Fee income: | ||||||||||||||||||||||||
Non-control/non-affiliate investments | 323 | 82 | 987 | 1,086 | ||||||||||||||||||||
Affiliate investments | 748 | 244 | 760 | 675 | ||||||||||||||||||||
Control investment | 14 | 17 | 66 | 152 | ||||||||||||||||||||
Total fee income | 1,085 | 343 | 1,813 | 1,913 | ||||||||||||||||||||
Total investment income | 12,571 | 8,292 | 42,834 | 33,426 | ||||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Interest and financing expense | 3,036 | 1,584 | 9,232 | 5,813 | ||||||||||||||||||||
Management fees | 1,749 | 1,273 | 6,335 | 4,999 | ||||||||||||||||||||
Incentive fee | 1,368 | 713 | 4,409 | 2,962 | ||||||||||||||||||||
Professional fees | 386 | 275 | 1,245 | 1,115 | ||||||||||||||||||||
Administration fee | 349 | 332 | 1,601 | 1,314 | ||||||||||||||||||||
Other Expenses | 362 | 296 | 1,649 | 1,346 | ||||||||||||||||||||
Incentive fee waiver | — | — | (22 | ) | — | |||||||||||||||||||
Total expenses, net of incentive fee waiver | 7,228 | 4,473 | 24,449 | 17,549 | ||||||||||||||||||||
Net investment income | 5,321 | 3,819 | 18,385 | 15,877 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | ||||||||||||||||||||||||
Net realized gain (loss) on non-control/non-affiliate investments | 37 | 1,793 | (4,966 | ) | (3,248 | ) | ||||||||||||||||||
Net realized gain on affiliate investments | 4,205 | 5,590 | 187 | 10,081 | ||||||||||||||||||||
Net unrealized depreciation on non-control/non-affiliate investments | (5,409 | ) | (2,365 | ) | (2,484 | ) | (9,715 | ) | ||||||||||||||||
Net unrealized depreciation on affiliate investments | (7,199 | ) | (2,845 | ) | (803 | ) | (5,088 | ) | ||||||||||||||||
Net unrealized appreciation (depreciation) on control investments | (1,050 | ) | (1,842 | ) | (747 | ) | 3 | |||||||||||||||||
Net gain (loss) on investments | (9,416 | ) | 331 | (8,813 | ) | (7,967 | ) | |||||||||||||||||
Net increase (decrease) in net assets resulting from operations | $ | (4,095 | ) | $ | 4,150 | $ | 9,572 | $ | 7,910 | |||||||||||||||
Net investment income per common share - basic and diluted | $ | 0.40 | $ | 0.29 | $ | 1.38 | $ | 1.28 | ||||||||||||||||
Net increase (decrease) in net assets resulting from operations per common share - basic and diluted | $ | (0.31 | ) | $ | 0.31 | $ | 0.72 | $ | 0.64 | |||||||||||||||
Distributions declared per common share | $ | 0.34 | $ | 0.34 | $ | 1.73 | $ | 1.36 | ||||||||||||||||
Basic and diluted weighted average shares outstanding | 13,352,873 | 13,334,909 | 13,348,203 | 12,403,706 | ||||||||||||||||||||
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; management's belief regarding the Company's status relative to
other BDCs and, in particular those who have paid consistent
distributions since 2012; management's belief that the expertise of its
investment advisor positions the Company to leverage recent regulatory
change to increase net investment income; the alignment of interest of
the Company's stockholder and the investment advisor and whether such
interest impacts the Company's commitment to capital preservation and
long-term performance; 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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Source:
INVESTOR RELATIONS :
Steve Altebrando
646-652-8473
saltebrando@ofsmanagement.com