OFS Capital Corporation Announces Third Quarter 2019 Financial Results
Net Investment Income of
Declares 28th Consecutive
FINANCIAL HIGHLIGHTS
-
Net investment income of
$4.85 million , or$0.36 per share, an increase of 3% year-over-year and above the$0.34 quarterly distribution. -
Closed investments in the third quarter of 2019 totaled approximately
$41.3 million , including$22.7 million of senior loans financed by the BNP credit facility. -
Net asset value ("NAV") per share decreased to
$12.74 atSeptember 30, 2019 from$12.95 atJune 30, 2019 . No new non-accruals. -
At
September 30, 2019 , 90% and 78% of our loan portfolio and total portfolio, respectively, consisted of senior secured loans, based on fair value. -
On
November 6, 2019 ,OFS Capital's Board of Directors declared a distribution of$0.34 per share for the fourth quarter of 2019, payable onDecember 31, 2019 to stockholders of record as ofDecember 24, 2019 .
"Our net investment income again exceeded our distribution," said
We also remain focused on capital preservation. Our
HIGHLIGHTS |
|||||
($ in millions, except for per share data) |
|||||
Portfolio Overview |
|
At September 30, 2019 |
|||
Total assets |
|
$ |
|
518.3 |
|
Investment portfolio, at fair value |
|
$ |
|
502.2 |
|
Net assets |
|
$ |
|
170.4 |
|
Net asset value per share |
|
$ |
|
12.74 |
|
Weighted average yield on performing debt investments (1) |
|
|
10.78 |
% |
|
Weighted average yield on total debt investments (2) |
|
|
10.51 |
% |
|
Weighted average yield on total investments (3) |
|
|
9.96 |
% |
(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 our 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 the annual effective yield on our structured finance notes at the balance sheet date divided by (b) amortized cost of our debt and structured finance note investments, excluding assets on non-accrual basis 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 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 divided by (b) amortized cost of our debt and structured finance note 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 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 September 30, |
|||||
Operating Results |
2019 |
2018 |
||||
Total investment income |
$ |
13.9 |
$ |
11.0 |
||
Net investment income |
$ |
4.9 |
$ |
4.7 |
||
Net investment income per common share, basic and diluted |
$ |
0.36 |
$ |
0.35 |
||
Net increase in net assets resulting from operations |
$ |
1.8 |
$ |
5.2 |
||
Quarter Ended September 30, |
||||||
Portfolio Activity |
2019 |
2018 |
||||
Number of new portfolio companies |
|
4 |
|
6 |
||
Investments in new portfolio companies |
$ |
25.5 |
$ |
38.2 |
||
Investments in existing portfolio companies |
$ |
13.4 |
$ |
9.1 |
||
Investments in structured finance notes |
$ |
2.4 |
$ |
— |
||
Number of portfolio companies at end of period |
|
73 |
|
47 |
PORTFOLIO AND INVESTMENT ACTIVITIES
During the third quarter of 2019,
The total fair value of OFS Capital’s investment portfolio was
RESULTS OF OPERATIONS
Income
Investment 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 remained stable for the three months ended
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
We recognized unrealized depreciation of
LIQUIDITY AND CAPITAL RESOURCES
At
RECENT DEVELOPMENTS
Registered unsecured bond offering
In October and
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 third quarter ended
OFS Capital Corporation and Subsidiaries |
|||||||||
Consolidated Statement of Assets and Liabilities |
|||||||||
(Dollar amounts in thousands, except per share data) |
|||||||||
|
September 30,
|
|
December 31,
|
||||||
|
(unaudited) |
|
|
||||||
Assets |
|
|
|
||||||
Investments, at fair value: |
|
|
|
||||||
Non-control/non-affiliate investments (amortized cost of $392,289 and $312,223,
|
$ |
|
368,634 |
|
|
$ |
|
297,749 |
|
Affiliate investments (amortized cost of $120,570 and $90,751, respectively) |
|
124,227 |
|
|
|
89,103 |
|
||
Control investments (amortized cost of $10,342 and $10,337, respectively) |
|
9,300 |
|
|
|
9,945 |
|
||
Total investments at fair value (amortized cost of $523,201 and $413,311, respectively) |
|
502,161 |
|
|
|
396,797 |
|
||
Cash |
|
7,974 |
|
|
|
38,172 |
|
||
Interest receivable |
|
3,298 |
|
|
|
2,787 |
|
||
Prepaid expenses and other assets |
|
4,854 |
|
|
|
3,665 |
|
||
Total assets |
$ |
|
518,287 |
|
|
$ |
|
441,421 |
|
|
|
|
|
||||||
Liabilities |
|
|
|
||||||
Revolving lines of credit |
$ |
|
92,475 |
|
|
$ |
|
12,000 |
|
SBA debentures (net of deferred debt issuance costs of $1,999 and $2,280, respectively) |
|
147,881 |
|
|
|
147,600 |
|
||
Unsecured notes (net of deferred debt issuance costs of $2,925 and $3,299 respectively) |
|
95,600 |
|
|
|
95,226 |
|
||
Interest payable |
|
2,045 |
|
|
|
2,791 |
|
||
Payable to adviser and affiliates |
|
4,049 |
|
|
|
3,700 |
|
||
Payable for investments purchased |
|
5,075 |
|
|
|
4,151 |
|
||
Accrued professional fees |
|
339 |
|
|
|
637 |
|
||
Other liabilities |
|
417 |
|
|
|
293 |
|
||
Total liabilities |
|
347,881 |
|
|
|
266,398 |
|
||
|
|
|
|
||||||
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, 13,371,451
|
|
134 |
|
|
|
134 |
|
||
Paid-in capital in excess of par |
|
187,890 |
|
|
|
187,540 |
|
||
Total distributable earnings (losses) |
|
(17,618 |
) |
|
|
(12,651 |
) |
||
Total net assets |
|
170,406 |
|
|
|
175,023 |
|
||
|
|
|
|
||||||
Total liabilities and net assets |
$ |
|
518,287 |
|
|
$ |
|
441,421 |
|
|
|
|
|
||||||
Number of shares outstanding |
|
13,371,451 |
|
|
|
13,357,337 |
|
||
Net asset value per share |
$ |
|
12.74 |
|
|
$ |
|
13.10 |
|
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
|
||||||||||||||||
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||||||
Investment income |
|
|
|
|
|
|
|
||||||||||||
Interest income: |
|
|
|
|
|
|
|
||||||||||||
Non-control/non-affiliate investments |
$ |
|
10,181 |
|
|
$ |
|
7,424 |
|
|
$ |
|
28,110 |
|
|
$ |
|
19,508 |
|
Affiliate investments |
|
2,647 |
|
|
|
2,455 |
|
|
|
7,640 |
|
|
|
7,308 |
|
||||
Control investment |
|
262 |
|
|
|
255 |
|
|
|
784 |
|
|
|
744 |
|
||||
Total interest income |
|
13,090 |
|
|
|
10,134 |
|
|
|
36,534 |
|
|
|
27,560 |
|
||||
Payment-in-kind interest and dividend income: |
|
|
|
|
|
|
|
||||||||||||
Non-control/non-affiliate investments |
|
96 |
|
|
|
178 |
|
|
|
289 |
|
|
|
524 |
|
||||
Affiliate investments |
|
347 |
|
|
|
308 |
|
|
|
899 |
|
|
|
1,054 |
|
||||
Control investment |
|
28 |
|
|
|
28 |
|
|
|
83 |
|
|
|
82 |
|
||||
Total payment-in-kind interest and dividend income |
|
471 |
|
|
|
514 |
|
|
|
1,271 |
|
|
|
1,660 |
|
||||
Dividend income: |
|
|
|
|
|
|
|
||||||||||||
Affiliate investments |
— |
|
|
— |
|
|
|
173 |
|
|
|
130 |
|
||||||
Control investment |
— |
|
|
|
58 |
|
|
|
89 |
|
|
|
185 |
|
|||||
Total dividend income |
— |
|
|
|
58 |
|
|
|
262 |
|
|
|
315 |
|
|||||
Fee income: |
|
|
|
|
|
|
|
||||||||||||
Non-control/non-affiliate investments |
|
285 |
|
|
|
251 |
|
|
|
781 |
|
|
|
664 |
|
||||
Affiliate investments |
|
6 |
|
|
|
7 |
|
|
|
216 |
|
|
|
12 |
|
||||
Control investment |
|
6 |
|
|
|
18 |
|
|
|
39 |
|
|
|
52 |
|
||||
Total fee income |
|
297 |
|
|
|
276 |
|
|
|
1,036 |
|
|
|
728 |
|
||||
Total investment income |
|
13,858 |
|
|
|
10,982 |
|
|
|
39,103 |
|
|
|
30,263 |
|
||||
Expenses |
|
|
|
|
|
|
|
||||||||||||
Interest expense |
|
4,464 |
|
|
|
2,393 |
|
|
|
11,564 |
|
|
|
6,196 |
|
||||
Management fee |
|
2,164 |
|
|
|
1,678 |
|
|
|
6,062 |
|
|
|
4,586 |
|
||||
Incentive fee |
|
1,214 |
|
|
|
1,170 |
|
|
|
3,622 |
|
|
|
3,041 |
|
||||
Professional fees |
|
510 |
|
|
|
458 |
|
|
|
1,413 |
|
|
|
859 |
|
||||
Administration fee |
|
396 |
|
|
|
311 |
|
|
|
1,250 |
|
|
|
1,252 |
|
||||
Other expenses |
|
257 |
|
|
|
282 |
|
|
|
651 |
|
|
|
1,287 |
|
||||
Total expenses before incentive fee waiver |
|
9,005 |
|
|
|
6,292 |
|
|
|
24,562 |
|
|
|
17,221 |
|
||||
Incentive fee waiver |
— |
|
|
— |
|
|
— |
|
|
|
(22 |
) |
|||||||
Total expenses, net of incentive fee waiver |
|
9,005 |
|
|
|
6,292 |
|
|
|
24,562 |
|
|
|
17,199 |
|
||||
Net investment income |
|
4,853 |
|
|
|
4,690 |
|
|
|
14,541 |
|
|
|
13,064 |
|
||||
|
|
|
|
|
|
|
|
||||||||||||
Net realized and unrealized gain (loss) on investments |
|
|
|
|
|
|
|
||||||||||||
Net realized gain (loss) on non-control/non-affiliate investments |
|
51 |
|
|
— |
|
|
|
(843 |
) |
|
|
(5,003 |
) |
|||||
Net realized loss on affiliate investments |
— |
|
|
— |
|
|
— |
|
|
|
(4,018 |
) |
|||||||
Net unrealized appreciation (depreciation) on non-control/non-
|
|
(6,534 |
) |
|
|
(923 |
) |
|
|
(9,506 |
) |
|
|
2,925 |
|
||||
Net unrealized appreciation on affiliate investments |
|
4,765 |
|
|
|
1,223 |
|
|
|
5,305 |
|
|
|
6,396 |
|
||||
Net unrealized appreciation (depreciation) on control investment |
|
(1,373 |
) |
|
|
189 |
|
|
|
(650 |
) |
|
|
303 |
|
||||
|
|
|
|
|
|
|
|
||||||||||||
Net gain (loss) on investments |
|
(3,091 |
) |
|
|
489 |
|
|
|
(5,694 |
) |
|
|
603 |
|
||||
|
|
|
|
|
|
|
|
||||||||||||
Net increase in net assets resulting from operations |
$ |
|
1,762 |
|
|
$ |
|
5,179 |
|
|
$ |
|
8,847 |
|
|
$ |
|
13,667 |
|
|
|
|
|
|
|
|
|
||||||||||||
Net investment income per common share – basic and diluted |
$ |
|
0.36 |
|
|
$ |
|
0.35 |
|
|
$ |
|
1.09 |
|
|
$ |
|
0.98 |
|
Net increase in net assets resulting from operations per common
|
$ |
|
0.13 |
|
|
$ |
|
0.39 |
|
|
$ |
|
0.66 |
|
|
$ |
|
1.02 |
|
Distributions declared per common share |
$ |
|
0.34 |
|
|
$ |
|
0.34 |
|
|
$ |
|
1.02 |
|
|
$ |
|
1.39 |
|
Basic and diluted weighted average shares outstanding |
|
13,366,515 |
|
|
|
13,350,484 |
|
|
|
13,361,757 |
|
|
|
13,346,630 |
|
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 belief that the Company is well positioned for the future when there can be no assurance of future results; 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
1 |
Registration does not imply a certain level of skill or training |
View source version on businesswire.com: https://www.businesswire.com/news/home/20191108005117/en/
Source:
INVESTOR RELATIONS:
Steve Altebrando
646-652-8473
saltebrando@ofsmanagement.com