Net Investment Income of
Declares 31st Consecutive Quarterly Distribution on common shares
FINANCIAL HIGHLIGHTS
-
Net investment income of
$2.61 million , or$0.19 per share. -
Net asset value ("NAV") per share increased to
$10.10 atJune 30, 2020 from$9.71 atMarch 31, 2020 . During the three months endedJune 30, 2020 , our portfolio recognized net gains of$5.1 million , or$0.38 per share. -
At
June 30, 2020 , 90% and 75% of our loan portfolio and total portfolio, respectively, consisted of senior secured loans, based on fair value. -
As of
June 30, 2020 , 90% of our debt matures in 2024 and beyond and 45% of our outstanding debt is unsecured. -
On
July 28, 2020 ,OFS Capital's Board of Directors declared a distribution of$0.17 per share for the third quarter of 2020, payable onSeptember 30, 2020 , to stockholders of record as ofSeptember 23, 2020 .
We are actively monitoring our portfolio companies throughout this period of economic uncertainty including assessing portfolio companies' operational and liquidity outlook. In the second quarter, we had only one new loan placed on non-accrual status. With respect to our portfolio, at
At
We believe that we have diverse sources of funding. As of quarter end, we had approximately
"Given the challenging economic and public health impact of the on-going COVID-19 pandemic, we are pleased that during the quarter our portfolio companies performed above our expectations,” said
HIGHLIGHTS ($ in millions, except for per share data) |
||||
Portfolio Overview |
|
At |
||
Total assets |
|
$ |
475.4 |
|
Investment portfolio, at fair value |
|
$ |
435.8 |
|
Net assets |
|
$ |
135.4 |
|
Net asset value per share |
|
$ |
10.10 |
|
Weighted average yield on performing debt investments (1) |
|
10.14 |
% |
|
Weighted average yield on total debt investments (2) |
|
9.01 |
% |
|
Weighted average yield on total investments (3) |
|
8.52 |
% |
(1) |
The weighted average yield on our performing debt and structured finance note investments is computed as (a) the sum of (i) the annual stated accruing interest on debt investments plus the annualized accretion of loan origination fees, original issue discount, market discount or premium, and loan amendment fees at the balance sheet date, plus (ii) the annual effective yield on structured finance notes at the balance sheet date divided by (b) amortized cost of our debt and structured finance note investments, excluding debt investments in non-accrual status as of the balance sheet date. |
|
(2) |
The weighted average yield on our total debt and structured finance note investments is computed as (a) the sum of (i) the annual stated accruing interest on debt investments plus the annualized accretion of loan origination fees, original issue discount, market discount or premium, and loan amendment fees at the balance sheet date, plus (ii) the annual effective yield on structured finance notes at the balance sheet date divided by (b) amortized cost of our debt and structured finance note investments, including debt investments in non-accrual status as of the balance sheet date. |
|
(3) |
The weighted average yield on total 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 on our debt investments at the balance sheet date, plus the annual effective yield on our structured finance notes at the balance sheet date, 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 |
|||||
Operating Results |
2020 |
2019 |
||||
Total investment income |
$ |
11.0 |
$ |
12.9 |
||
Net investment income |
$ |
2.6 |
$ |
4.9 |
||
Net investment income per common share, basic and diluted |
$ |
0.19 |
$ |
0.36 |
||
Net increase in net assets resulting from operations |
$ |
7.7 |
$ |
3.4 |
||
|
Quarter Ended |
|||||
Portfolio Activity |
2020 |
2019 |
||||
Number of new portfolio company investments |
5 |
22 |
||||
Investments in new portfolio companies |
$ |
2.4 |
$ |
40.8 |
||
Investments in existing portfolio companies |
$ |
4.9 |
$ |
18.4 |
||
Investments in structured finance notes |
$ |
0.8 |
$ |
5.6 |
||
Number of portfolio companies and structured finance notes at end of period |
73 |
69 |
||||
PORTFOLIO AND INVESTMENT ACTIVITIES
The total fair value of our investment portfolio was
RESULTS OF OPERATIONS
Income
Investment Income
Interest income decreased by
During the three months ended
Expenses
Interest expense
Interest expense for the three months ended
Management fee
Management fee expense for the three months ended
Incentive fee
Incentive fee expense decreased
Administration fee
Administration fee expense for the three months ended
Our portfolio experienced net gains of
Within our senior debt investments, we recognized net losses of
Within our subordinated debt investments, we recognized unrealized depreciation of
Within our preferred equity investments, we recognized unrealized depreciation of
Within our common equity, warrants and other investments, we recognized unrealized appreciation of
Within our Structured Finance Note investments, we recognized unrealized appreciation of
LIQUIDITY AND CAPITAL RESOURCES
At
At our request, on
RECENT DEVELOPMENTS
On
Accordingly, the Company cannot predict the extent to which its business, financial condition, results of operations and cash flows will be affected at this time. The potential impact to the Company’s results will depend to a large extent on future developments and new information that may emerge regarding the duration and severity of the COVID-19 pandemic and the actions taken by authorities and other entities to contain the coronavirus or treat its impact, all of which are beyond the Company’s control.
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 (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
Consolidated Statement of Assets and Liabilities (Dollar amounts in thousands, except per share data) |
||||||||
|
|
|
|
|||||
|
(unaudited) |
|
|
|||||
Assets |
|
|
|
|||||
Investments, at fair value: |
|
|
|
|||||
Non-control/non-affiliate investments (amortized cost of |
$ |
314,305 |
|
|
$ |
372,535 |
|
|
Affiliate investments (amortized cost of |
114,047 |
|
|
135,679 |
|
|||
Control investment (amortized cost of |
7,410 |
|
|
8,717 |
|
|||
Total investments at fair value (amortized cost of |
435,762 |
|
|
516,931 |
|
|||
Cash |
31,781 |
|
|
13,447 |
|
|||
Interest receivable |
3,114 |
|
|
3,349 |
|
|||
Receivable for investment sold |
634 |
|
|
— |
|
|||
Prepaid expenses and other assets |
4,151 |
|
|
4,461 |
|
|||
Total assets |
$ |
475,442 |
|
|
$ |
538,188 |
|
|
|
|
|
|
|||||
Liabilities |
|
|
|
|||||
Revolving lines of credit |
$ |
51,750 |
|
|
$ |
56,450 |
|
|
SBA debentures (net of deferred debt issuance costs of |
132,203 |
|
|
147,976 |
|
|||
Unsecured notes (net of deferred debt issuance costs of |
148,447 |
|
|
148,052 |
|
|||
Interest payable |
3,109 |
|
|
3,505 |
|
|||
Payable to adviser and affiliates |
2,694 |
|
|
4,106 |
|
|||
Payable for investments purchased |
971 |
|
|
10,264 |
|
|||
Accrued professional fees |
562 |
|
|
621 |
|
|||
Other liabilities |
309 |
|
|
587 |
|
|||
Total liabilities |
340,045 |
|
|
371,561 |
|
|||
|
|
|
|
|||||
Commitments and contingencies |
|
|
|
|||||
|
|
|
|
|||||
Net assets |
|
|
|
|||||
Preferred stock, par value of |
$ |
— |
|
|
$ |
— |
|
|
Common stock, par value of |
134 |
|
|
134 |
|
|||
Paid-in capital in excess of par |
187,437 |
|
|
187,305 |
|
|||
Total distributable earnings (losses) |
(52,174 |
) |
|
(20,812 |
) |
|||
Total net assets |
135,397 |
|
|
166,627 |
|
|||
|
|
|
|
|||||
Total liabilities and net assets |
$ |
475,442 |
|
|
$ |
538,188 |
|
|
|
|
|
|
|||||
Number of shares outstanding |
13,399,694 |
|
|
13,376,836 |
|
|||
Net asset value per share |
$ |
10.10 |
|
|
$ |
12.46 |
|
Condensed Consolidated Statements of Operations (unaudited) (Dollar amounts in thousands, except per share data) |
||||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
|||||||||||||
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|||||||||
Investment income |
|
|
|
|
|
|
|
|||||||||
Interest income: |
|
|
|
|
|
|
|
|||||||||
Non-control/non-affiliate investments |
$ |
8,233 |
|
|
$ |
9,287 |
|
|
$ |
17,305 |
|
|
$ |
17,929 |
|
|
Affiliate investments |
1,692 |
|
|
2,660 |
|
|
4,086 |
|
|
4,993 |
|
|||||
Control investment |
209 |
|
|
263 |
|
|
405 |
|
|
522 |
|
|||||
Total interest income |
10,134 |
|
|
12,210 |
|
|
21,796 |
|
|
23,444 |
|
|||||
Payment-in-kind interest and dividend income: |
|
|
|
|
|
|
|
|||||||||
Non-control/non-affiliate investments |
264 |
|
|
96 |
|
|
525 |
|
|
193 |
|
|||||
Affiliate investments |
191 |
|
|
300 |
|
|
460 |
|
|
552 |
|
|||||
Control investment |
102 |
|
|
28 |
|
|
187 |
|
|
55 |
|
|||||
Total payment-in-kind interest and dividend income |
557 |
|
|
424 |
|
|
1,172 |
|
|
800 |
|
|||||
Dividend income: |
|
|
|
|
|
|
|
|||||||||
Affiliate investments |
— |
|
|
— |
|
|
100 |
|
|
173 |
|
|||||
Control investment |
— |
|
|
89 |
|
|
— |
|
|
89 |
|
|||||
Total dividend income |
— |
|
|
89 |
|
|
100 |
|
|
262 |
|
|||||
Fee income: |
|
|
|
|
|
|
|
|||||||||
Non-control/non-affiliate investments |
279 |
|
|
154 |
|
|
764 |
|
|
496 |
|
|||||
Affiliate investments |
8 |
|
|
5 |
|
|
13 |
|
|
210 |
|
|||||
Control investment |
3 |
|
|
18 |
|
|
6 |
|
|
33 |
|
|||||
Total fee income |
290 |
|
|
177 |
|
|
783 |
|
|
739 |
|
|||||
Total investment income |
10,981 |
|
|
12,900 |
|
|
23,851 |
|
|
25,245 |
|
|||||
Expenses |
|
|
|
|
|
|
|
|||||||||
Interest expense |
4,931 |
|
|
3,645 |
|
|
9,853 |
|
|
7,100 |
|
|||||
Management fee |
1,869 |
|
|
2,055 |
|
|
3,888 |
|
|
3,898 |
|
|||||
Incentive fee |
215 |
|
|
1,245 |
|
|
1,098 |
|
|
2,408 |
|
|||||
Professional fees |
460 |
|
|
368 |
|
|
1,108 |
|
|
903 |
|
|||||
Administration fee |
500 |
|
|
417 |
|
|
1,020 |
|
|
854 |
|
|||||
Other expenses |
399 |
|
|
310 |
|
|
746 |
|
|
394 |
|
|||||
Total expenses before incentive fee waiver |
8,374 |
|
|
8,040 |
|
|
17,713 |
|
|
15,557 |
|
|||||
Incentive fee waiver |
— |
|
|
— |
|
|
(441 |
) |
|
— |
|
|||||
Total expenses, net of incentive fee waiver |
8,374 |
|
|
8,040 |
|
|
17,272 |
|
|
15,557 |
|
|||||
Net investment income |
2,607 |
|
|
4,860 |
|
|
6,579 |
|
|
9,688 |
|
|||||
Net realized and unrealized gain (loss) |
|
|
|
|
|
|
|
|||||||||
Net realized loss on non-control/non-affiliate investments |
(1,040 |
) |
|
(90 |
) |
|
(10,013 |
) |
|
(894 |
) |
|||||
Loss on extinguishment of debt |
— |
|
|
— |
|
|
(149 |
) |
|
— |
|
|||||
Net unrealized appreciation (depreciation) on non-control/non-affiliate investments, net of taxes |
6,808 |
|
|
(3,630 |
) |
|
(15,614 |
) |
|
(2,972 |
) |
|||||
Net unrealized appreciation (depreciation) on affiliate investments |
(880 |
) |
|
1,660 |
|
|
(3,804 |
) |
|
540 |
|
|||||
Net unrealized appreciation (depreciation) on control investment |
163 |
|
|
553 |
|
|
(1,501 |
) |
|
723 |
|
|||||
Net gain (loss) |
5,051 |
|
|
(1,507 |
) |
|
(31,081 |
) |
|
(2,603 |
) |
|||||
Net increase (decrease) in net assets resulting from operations |
$ |
7,658 |
|
|
$ |
3,353 |
|
|
$ |
(24,502 |
) |
|
$ |
7,085 |
|
|
Net investment income per common share – basic and diluted |
$ |
0.19 |
|
|
$ |
0.36 |
|
|
$ |
0.49 |
|
|
$ |
0.73 |
|
|
Net increase (decrease) in net assets resulting from operations per common share – basic and diluted |
$ |
0.57 |
|
|
$ |
0.25 |
|
|
$ |
(1.83 |
) |
|
$ |
0.53 |
|
|
Distributions declared per common share |
$ |
0.17 |
|
|
$ |
0.34 |
|
|
$ |
0.51 |
|
|
$ |
0.68 |
|
|
Basic and diluted weighted average shares outstanding |
13,392,608 |
|
|
13,361,193 |
|
|
13,384,808 |
|
|
13,359,338 |
|
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, net asset value and net investment gains and losses and the factors that may affect such results; the diversity of the Company's funding sources; the deployment of capital into add-on and new investments and the optimization of OFS's portfolio and the impact of such actions on the Company's investment income growth, when there can be no assurance that such efforts will improve investment income or that any such investments will be identified and consummated or that the portfolio will be optimized; the Company's expectations related to the reduction in the unused commitment fee for its revolving corporate credit line with
1 Registration does not imply a certain level of skill or training
View source version on businesswire.com: https://www.businesswire.com/news/home/20200731005110/en/
INVESTOR RELATIONS CONTACT:
646-652-8473
saltebrando@ofsmanagement.com
Source: