OFS Capital Corporation Announces Third Quarter 2018 Financial Results
Declares 24th Consecutive
Net Investment Income Exceeds Distribution
FINANCIAL HIGHLIGHTS
-
Net investment income of
$4.69 million , or$0.35 per share exceeds quarterly distribution. -
Net asset value ("NAV") per share increased to
$13.75 atSeptember 30, 2018 from$13.70 per share atJune 30, 2018 . -
At
September 30, 2018 , 82% of our loan portfolio consisted of senior secured loans, based on fair value, and 79% were floating rate. -
In
October 2018 andNovember 2018 , we issued$48.5 million of seven year, fixed-rate bonds including$5.0 million of additional notes issued pursuant to the partial exercise of the underwriters overallotment option; as of today, our long-term debt was 100% fixed rate and 92% of our debt matures in 2024 and beyond. -
Closed investments in the third quarter of 2018
totaled approximately
$47.5 million . As ofNovember 2, 2018 , we closed approximately$29.0 million of additional new investments during the fourth quarter of 2018. -
On
October 30, 2018, OFS Capital's Board of Directors declared a distribution of$0.34 per share for the fourth quarter of 2018, payable onDecember 31, 2018 to stockholders of record as ofDecember 17, 2018 .
"Our net investment income again exceeded our distribution," said
We have a senior secured focused loan portfolio and our NAV increased this quarter. We think our portfolio is well positioned for rising interest rates, as a vast majority of our loans are floating rate while our liabilities are fixed rate."
HIGHLIGHTS
($ in millions, except for per share data)
Portfolio Overview |
At September 30, 2018 |
||
Total assets | $ | 408.5 | |
Investment portfolio, at fair value | $ | 396.0 | |
Net assets | $ | 183.6 | |
Net asset value per share | $ | 13.75 | |
Weighted average yield on performing debt investments (1) | 12.14% | ||
Weighted average yield on total debt investments (2) | 11.73% | ||
Weighted average yield on total investments (3) | 11.00% |
(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 September 30, | |||||||
Operating Results | 2018 | 2017 | |||||
Total investment income | $ | 11.0 | $ | 9.1 | |||
Net investment income | $ | 4.7 | $ | 4.4 | |||
Net investment income per common share, basic and diluted | $ | 0.35 | $ | 0.33 | |||
Net increase in net assets resulting from operations | $ | 5.2 | $ | 1.2 | |||
Quarter Ended September 30, | |||||||
Portfolio Activity | 2018 | 2017 | |||||
Number of new portfolio companies | 6 | 3 | |||||
Investments in new portfolio companies | $ | 38.2 | $ | 40.5 | |||
Investments in existing portfolio companies | $ | 9.1 | $ | 1.9 | |||
Number of portfolio companies at end of period | 47 | 40 | |||||
PORTFOLIO AND INVESTMENT ACTIVITIES
During the third quarter of 2018,
The total fair value of OFS Capital’s investment portfolio was
RESULTS OF OPERATIONS
Income
Interest Income
Interest income increased by
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 increased by
Administration fee
Administration fee expense for the three months ended
Net Gain (Loss) on Investments
We recognized net losses of
We recognized net losses of
We recognized net gains of
We recognized net gains of
LIQUIDITY AND CAPITAL RESOURCES
At
RECENT DEVELOPMENTS
Registered unsecured bond offering
In
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 third quarter ended
OFS Capital Corporation and Subsidiaries | ||||||||
Consolidated Balance Sheets | ||||||||
(Dollar amounts in thousands, except per share data) | ||||||||
September 30, 2018 |
December 31, 2017 |
|||||||
(unaudited) | ||||||||
Assets | ||||||||
Investments, at fair value: | ||||||||
Non-control/non-affiliate investments (amortized cost of $281,575
and $209,360, |
$ | 272,764 | $ | 197,374 | ||||
Affiliate investments (amortized cost of $106,754 and $70,402, respectively) | 112,305 | 69,557 | ||||||
Control investments (amortized cost of $10,306 and $10,213, respectively) | 10,964 | 10,568 | ||||||
Total investments at fair value (amortized cost of $398,635 and $289,975, respectively) | 396,033 | 277,499 | ||||||
Cash and cash equivalents | 6,043 | 72,952 | ||||||
Interest receivable | 2,637 | 2,734 | ||||||
Prepaid expenses and other assets | 3,825 | 4,593 | ||||||
Total assets | $ | 408,538 | $ | 357,778 | ||||
Liabilities | ||||||||
Revolving line of credit | $ | 17,000 | $ | 17,600 | ||||
SBA debentures (net of deferred debt issuance costs of $2,375 and $2,657, respectively) | 147,505 | 147,223 | ||||||
Unsecured notes (net of deferred debt issuance costs of $1,688 and $0, respectively) | 48,312 | — | ||||||
Interest payable | 976 | 1,596 | ||||||
Payable to adviser and affiliates (Note 3) | 3,348 | 2,463 | ||||||
Payable for investments purchased | 6,777 | — | ||||||
Accrued professional fees | 686 | 433 | ||||||
Other liabilities | 336 | 127 | ||||||
Total liabilities | 224,940 | 169,442 | ||||||
Commitments and contingencies | ||||||||
Net assets | ||||||||
Preferred stock, par value of $0.01 per share, 2,000,000 shares
authorized, -0- shares |
$ | — | $ | — | ||||
Common stock, par value of $0.01 per share, 100,000,000 shares
authorized, 13,352,824 |
134 | 133 | ||||||
Paid-in capital in excess of par | 187,846 | 187,398 | ||||||
Accumulated undistributed net investment income | 7,599 | 9,404 | ||||||
Accumulated undistributed net realized gain (loss) | (9,120 | ) | 3,881 | |||||
Net unrealized depreciation on investments | (2,861 | ) | (12,480 | ) | ||||
Total net assets | 183,598 | 188,336 | ||||||
Total liabilities and net assets | $ | 408,538 | $ | 357,778 | ||||
Number of shares outstanding | 13,352,824 | 13,340,217 | ||||||
Net asset value per share | $ | 13.75 | $ | 14.12 | ||||
OFS Capital Corporation and Subsidiaries | ||||||||||||||||
Condensed Consolidated Statements of Operations (unaudited) | ||||||||||||||||
(Dollar amounts in thousands, except per share data) | ||||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Investment income | ||||||||||||||||
Interest income: | ||||||||||||||||
Non-control/non-affiliate investments | $ | 7,424 | $ | 5,485 | $ | 19,508 | $ | 14,520 | ||||||||
Affiliate investments | 2,455 | 1,601 | 7,308 | 5,089 | ||||||||||||
Control investment | 255 | 236 | 744 | 1,302 | ||||||||||||
Total interest income | 10,134 | 7,322 | 27,560 | 20,911 | ||||||||||||
Payment-in-kind interest and dividend income: | ||||||||||||||||
Non-control/non-affiliate investments | 178 | 350 | 524 | 976 | ||||||||||||
Affiliate investments | 308 | 394 | 1,054 | 1,120 | ||||||||||||
Control investment | 28 | 27 | 82 | 104 | ||||||||||||
Total payment-in-kind interest and dividend income | 514 | 771 | 1,660 | 2,200 | ||||||||||||
Dividend income: | ||||||||||||||||
Non-control/non-affiliate investments |
- |
- |
- |
50 | ||||||||||||
Affiliate investments |
- |
33 | 130 | 118 | ||||||||||||
Control investment | 58 | 92 | 185 | 262 | ||||||||||||
Total dividend income | 58 | 125 | 315 | 430 | ||||||||||||
Fee income: | ||||||||||||||||
Non-control/non-affiliate investments | 251 | 679 | 664 | 1,027 | ||||||||||||
Affiliate investments | 7 | 208 | 12 | 431 | ||||||||||||
Control investment | 18 | 17 | 52 | 135 | ||||||||||||
Total fee income | 276 | 904 | 728 | 1,593 | ||||||||||||
Total investment income | 10,982 | 9,122 | 30,263 | 25,134 | ||||||||||||
Expenses | ||||||||||||||||
Interest expense | 2,393 | 1,503 | 6,196 | 4,229 | ||||||||||||
Management fee | 1,678 | 1,310 | 4,586 | 3,726 | ||||||||||||
Incentive fee | 1,170 | 1,090 | 3,041 | 2,249 | ||||||||||||
Professional fees | 458 | 284 | 859 | 840 | ||||||||||||
Administration fee | 311 | 274 | 1,252 | 982 | ||||||||||||
Other expenses | 282 | 259 | 1,287 | 1,050 | ||||||||||||
Total expenses before incentive fee waiver | 6,292 | 4,720 | 17,221 | 13,076 | ||||||||||||
Incentive fee waiver |
- |
- |
(22 | ) |
- |
|||||||||||
Total expenses, net of incentive fee waiver | 6,292 | 4,720 | 17,199 | 13,076 | ||||||||||||
Net investment income | 4,690 | 4,402 | 13,064 | 12,058 | ||||||||||||
Net realized and unrealized gain (loss) on investments | ||||||||||||||||
Net realized loss on non-control/non-affiliate |
- |
(5,204 | ) | (5,003 | ) | (5,041 | ) | |||||||||
Net realized gain (loss) on affiliate investments |
- |
3,617 | (4,018 | ) | 4,491 | |||||||||||
Net unrealized appreciation (depreciation) on |
(923 | ) | 1,196 | 2,925 | (7,350 | ) | ||||||||||
Net unrealized appreciation (depreciation) on affiliate |
1,223 | (2,901 | ) | 6,396 | (2,243 | ) | ||||||||||
Net unrealized appreciation on control investment | 189 | 65 | 303 | 1,845 | ||||||||||||
Net gain (loss) on investments | 489 | (3,227 | ) | 603 | (8,298 | ) | ||||||||||
Net increase in net assets resulting from operations | $ | 5,179 | $ | 1,175 | $ | 13,667 | $ | 3,760 | ||||||||
Net investment income per common share – basic |
$ | 0.35 | $ | 0.33 | $ | 0.98 | $ | 1.00 | ||||||||
Net increase in net assets resulting from operations per |
$ | 0.39 | $ | 0.09 | $ | 1.02 | $ | 0.31 | ||||||||
Distributions declared per common share | $ | 0.34 | $ | 0.34 | $ | 1.05 | $ | 1.02 | ||||||||
Basic and diluted weighted average shares outstanding | 13,350,484 | 13,331,690 | 13,346,630 | 12,089,895 |
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; management's beliefs regarding the status of the Company as a
result of its quarterly distributions; management's views related to the
yield generated by
View source version on businesswire.com: https://www.businesswire.com/news/home/20181102005147/en/
Source:
INVESTOR RELATIONS CONTACT:
Steve Altebrando
646-652-8473
saltebrando@ofsmanagement.com