OFS Capital Corporation Announces Fourth Quarter and Full Year 2017 Financial Results
Declares a
Closed Investments of
FINANCIAL HIGHLIGHTS
-
Fourth quarter net investment income of
$3.8 million , or$0.29 per share. -
Closed investments totaled
$28.3 million in the fourth quarter of 2017. - As of March 2, 2018, closed approximately $44.4 million of additional new investments during the first quarter of 2018.
- 79% and 76% of the fair value of our loan portfolio was senior and floating rate, respectively, and the weighted average yield of our performing loan portfolio was 12.11% as of December 31, 2017(1).
- 89% of our debt is fixed rate with a weighted average cost of 3.43% as of December 31, 2017, with maturities in 2022 and beyond.
-
On February 27, 2018, OFS Capital's Board of Directors declared a
distribution of $0.34 per share for the first quarter of 2018. The
distribution, along with a previously announced
$0.37 per share special distribution, are payable on March 29, 2018 to stockholders of record as of March 22, 2018.
"We are focused on increasing our net investment income by executing on
our strong pipeline while maintaining the quality of our portfolio,"
said Bilal Rashid, OFS Capital's Chairman and Chief Executive Officer.
"So far in the first quarter, we have deployed
(1) | See Highlights contained in this press release for further information on our weighted average yield. Including assets on non-accrual, the weighted average yield of our debt investment portfolio was 11.59% at December 31, 2017. | |
HIGHLIGHTS |
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($ in millions, except for per share data) |
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Portfolio Overview | At December 31, 2017 | ||||
Total assets | $ | 357.8 | |||
Investment portfolio, at fair value | $ | 277.5 | |||
Net assets | $ | 188.3 | |||
Net asset value per share | $ | 14.12 | |||
Weighted average yield on performing debt investments (1) | 12.11 | % | |||
Weighted average yield on total debt investments (2) | 11.59 | % | |||
Weighted average yield on total investments (3) | 10.35 | % |
(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 | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Total investment income | $ | 8.3 | $ | 8.2 | $ | 33.4 | $ | 31.1 | ||||||||
Net investment income | $ | 3.8 | $ | 3.7 | $ | 15.9 | $ | 14.1 | ||||||||
Net investment income per common share, basic and diluted |
$ | 0.29 | $ | 0.39 | $ | 1.28 | $ | 1.46 | ||||||||
Adjusted net investment income (a Non-GAAP measure described below) |
$ | 3.8 | $ | 3.7 | $ | 15.9 | $ | 14.0 | ||||||||
Adjusted net investment income (a Non-GAAP measure described below) per share, basic and diluted |
$ | 0.29 | $ | 0.39 | $ | 1.28 | $ | 1.44 | ||||||||
Net increase in net assets resulting from operations | $ | 4.2 | $ | 4.8 | $ | 7.9 | $ | 13.8 | ||||||||
Quarter Ended December 31, | Year Ended December 31, | |||||||||||||||
Portfolio Activity | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Number of new portfolio companies | 4 | 3 | 17 | 8 | ||||||||||||
Investments in new portfolio companies | $ | 19.3 | $ | 26.1 | $ | 118.9 | $ | 49.4 | ||||||||
Investments in existing portfolio companies | $ | 9.0 | $ | 2.0 | $ | 24.0 | $ | 18.8 | ||||||||
Number of portfolio companies at end of period | 37 | 41 | 37 | 41 | ||||||||||||
PORTFOLIO AND INVESTMENT ACTIVITIES
During the fourth quarter of 2017, we closed four senior secured debt
investments in four 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
Fee income increased
Expenses
Interest expense
Interest expense increased primarily due to an increase in borrowings
under our senior secured revolving credit facility ("PWB Credit
Facility"). The average dollar amount of borrowings outstanding under
the PWB Credit Facility during the years ended
Management Fees
Management fee expense increased by
Incentive Fees
Incentive fee expense decreased by
Net Gain (Loss) on Investments
We recognized net losses of
We recognized net losses of
We recognized net gains of
We recognized net losses of
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2017, we had
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 December 31, 2017, which is to be filed with the
OFS Capital Corporation and Subsidiaries |
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Condensed Consolidated Balance Sheets |
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(Dollar amounts in thousands, except per share data) |
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December 31, | ||||||||
2017 | 2016 | |||||||
Assets | ||||||||
Investments, at fair value | ||||||||
Non-control/non-affiliate investments (amortized cost of $209,360 and $178,279, respectively) | $ | 197,374 | $ | 173,219 | ||||
Affiliate investments (amortized cost of $70,402 and $76,306, respectively) | 69,557 | 81,708 | ||||||
Control investments (amortized cost of $10,213 and $24,722, respectively) | 10,568 | 26,700 | ||||||
Total investments at fair value (amortized cost of $289,975 and $279,307, respectively) | 277,499 | 281,627 | ||||||
Cash and cash equivalents | 72,952 | 17,659 | ||||||
Interest receivable | 2,734 | 1,770 | ||||||
Prepaid expenses and other assets | 4,593 | 3,974 | ||||||
Total assets | $ | 357,778 | $ | 305,030 | ||||
Liabilities | ||||||||
Revolving line of credit | $ | 17,600 | $ | 9,500 | ||||
SBA debentures (net of deferred debt issuance costs of $2,656 and $3,037, respectively) | 147,223 | 146,843 | ||||||
Interest payable | 1,596 | 1,599 | ||||||
Management and incentive fees payable | 1,987 | 2,119 | ||||||
Administration fee payable | 476 | 435 | ||||||
Accrued professional fees | 433 | 477 | ||||||
Other liabilities | 127 | 279 | ||||||
Total liabilities | 169,442 | 161,252 | ||||||
Commitments and contingencies | ||||||||
Total net assets | 188,336 | 143,778 | ||||||
Total liabilities and net assets | $ | 357,778 | $ | 305,030 | ||||
Number of shares outstanding | 13,340,217 | 9,700,297 | ||||||
Net asset value per share | $ | 14.12 | $ | 14.82 | ||||
OFS Capital Corporation and Subsidiaries |
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Consolidated Statements of Operations |
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(Dollar amounts in thousands, except per share data) |
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Quarter Ended December 31, | Year Ended December 31, | |||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||
Investment income | ||||||||||||||||||||
Interest income: | ||||||||||||||||||||
Non-control/non-affiliate investments | $ | 5,534 | $ | 4,116 | $ | 20,078 | $ | 17,076 | ||||||||||||
Affiliate investments | 1,417 | 2,676 | 6,506 | 7,451 | ||||||||||||||||
Control investment | 238 | 541 | 1,540 | 1,873 | ||||||||||||||||
Total interest income | 7,189 | 7,333 | 28,124 | 26,400 | ||||||||||||||||
Payment-in-kind interest and dividend income: | ||||||||||||||||||||
Non-control/non-affiliate investments | 424 | 280 | 1,400 | 1,070 | ||||||||||||||||
Affiliate investments | 256 | 408 | 1,375 | 1,437 | ||||||||||||||||
Control investment | 28 | 39 | 132 | 120 | ||||||||||||||||
Total payment-in-kind interest and dividend income: | 708 | 727 | 2,907 | 2,627 | ||||||||||||||||
Dividend income: | ||||||||||||||||||||
Non-control/non-affiliate investments | — | — | 50 | 36 | ||||||||||||||||
Affiliate investments | 22 | (192 | ) | 140 | 170 | |||||||||||||||
Control investment | 30 | 75 | 292 | 269 | ||||||||||||||||
Total dividend income | 52 | (117 | ) | 482 | 475 | |||||||||||||||
Fee income: | ||||||||||||||||||||
Non-control/non-affiliate investments | 82 | 202 | 1,086 | 1,366 | ||||||||||||||||
Affiliate investments | 244 | 23 | 675 | 110 | ||||||||||||||||
Control investment | 17 | 41 | 152 | 116 | ||||||||||||||||
Total fee income | 343 | 266 | 1,913 | 1,592 | ||||||||||||||||
Total investment income | 8,292 | 8,209 | 33,426 | 31,094 | ||||||||||||||||
Expenses | ||||||||||||||||||||
Interest expense | 1,584 | 1,366 | 5,813 | 5,302 | ||||||||||||||||
Management fees | 1,273 | 1,192 | 4,999 | 4,516 | ||||||||||||||||
Incentive fee | 713 | 926 | 2,962 | 3,333 | ||||||||||||||||
Professional fees | 275 | 323 | 1,115 | 1,200 | ||||||||||||||||
Administration fee | 332 | 295 | 1,314 | 1,304 | ||||||||||||||||
General and administrative expenses | 296 | 371 | 1,346 | 1,294 | ||||||||||||||||
Total expenses | 4,473 | 4,473 | 17,549 | 16,949 | ||||||||||||||||
Net investment income | 3,819 | 3,736 | 15,877 | 14,145 | ||||||||||||||||
Net realized and unrealized gain (loss) on investments | ||||||||||||||||||||
Net realized gain (loss) on non-control/non-affiliate investments | 1,793 | (237 | ) | (3,248 | ) | 2,387 | ||||||||||||||
Net realized gain on affiliate investments | 5,590 | 17 | 10,081 | 17 | ||||||||||||||||
Net unrealized appreciation (depreciation) on
non-control/non-affiliate |
(2,365 | ) | (3,031 | ) | (9,715 | ) | (6,699 | ) | ||||||||||||
Net unrealized appreciation (depreciation) on affiliate investments | (2,845 | ) | 3,262 | (5,088 | ) | 3,341 | ||||||||||||||
Net unrealized appreciation on control investments | (1,842 | ) | 1,076 | 3 | 637 | |||||||||||||||
Net gain (loss) on investments | 331 | 1,087 | (7,967 | ) | (317 | ) | ||||||||||||||
Net increase in net assets resulting from operations | $ | 4,150 | $ | 4,823 | $ | 7,910 | $ | 13,828 | ||||||||||||
Net investment income per common share - basic and diluted | $ | 0.29 | $ | 0.39 | $ | 1.28 | $ | 1.46 | ||||||||||||
Net increase in net assets resulting from operations per common
share - basic |
$ | 0.31 | $ | 0.50 | $ | 0.64 | $ | 1.43 | ||||||||||||
Distributions declared per common share | $ | 0.34 | $ | 0.34 | $ | 1.36 | $ | 1.36 | ||||||||||||
Basic and diluted weighted average shares outstanding | 13,334,909 | 9,697,277 | 12,403,706 | 9,692,634 | ||||||||||||||||
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
non-GAAP basis. Adjusted NII represents net investment income excluding
the net capital gains incentive fee (fee adjustments) in periods in
which they occur. Our management agreement with
The following table provides a reconciliation from net investment income (the most comparable GAAP measure) to Adjusted NII for the periods presented:
Quarter Ended December 31, | Year Ended December 31, | |||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||
(Dollar amounts in thousands, except per share data) | ||||||||||||||||||||
Net investment income | $ | 3,819 | $ | 3,736 | $ | 15,877 | $ | 14,145 | ||||||||||||
Capital gains incentive fee | — | — | — | (139 | ) | |||||||||||||||
Adjusted net investment income | $ | 3,819 | $ | 3,736 | $ | 15,877 | $ | 14,006 | ||||||||||||
Adjusted net investment income per common share: | ||||||||||||||||||||
Basic and diluted | $ | 0.29 | $ | 0.39 | $ | 1.28 | $ | 1.44 | ||||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||
Basic and diluted | 13,334,909 | 9,697,277 | 12,403,706 | 9,700,297 | ||||||||||||||||
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 earnings growth; 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:
OFS Capital Corporation
Steve Altebrando,
646-652-8473
saltebrando@ofsmanagement.com