OFS Capital Corporation Announces Second Quarter 2019 Financial Results
Net Investment Income of
Declares 27th Consecutive
FINANCIAL HIGHLIGHTS
-
Net investment income of
$4.86 million , or$0.36 per share, an increase of 6% year-over-year and above the$0.34 quarterly distribution. -
Closed senior loan facility in
June 2019 ; new subsidiary will primarily invest in first lien loans to larger borrowers. -
Closed investments in the second quarter of 2019 totaled approximately
$64.7 million . -
Net asset value ("NAV") per share decreased to
$12.95 atJune 30, 2019 from$13.04 atMarch 31, 2019 due to unrealized depreciation of the portfolio. No new non-accruals. -
At
June 30, 2019 , 89% of our loan portfolio consisted of senior secured loans, based on fair value. -
On
July 30, 2019 ,OFS Capital's Board of Directors declared a distribution of$0.34 per share for the third quarter of 2019, payable onSeptember 30, 2019 to stockholders of record as ofSeptember 23, 2019 .
"Our net investment income again exceeded our distribution," said
We believe that our senior loan facility will further improve our return on equity while improving the overall risk profile of our portfolio. We believe that our advisor’s
HIGHLIGHTS
($ in millions, except for per share data)
Portfolio Overview |
|
At June 30, 2019 |
||
Total assets |
|
$ |
504.9 |
|
Investment portfolio, at fair value |
|
$ |
484.7 |
|
Net assets |
|
$ |
173.1 |
|
Net asset value per share |
|
$ |
12.95 |
|
Weighted average yield on performing debt investments (1) |
|
11.41 |
% |
|
Weighted average yield on total debt investments (2) |
|
11.10 |
% |
|
Weighted average yield on total investments (3) |
|
10.49 |
% |
(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 June 30, |
||||||
Operating Results |
|
2019 |
|
2018 |
||||
Total investment income |
|
$ |
12.9 |
|
|
$ |
10.3 |
|
Net investment income |
|
$ |
4.9 |
|
|
$ |
4.6 |
|
Net investment income per common share, basic and diluted |
|
$ |
0.36 |
|
|
$ |
0.34 |
|
Net increase in net assets resulting from operations |
|
$ |
3.4 |
|
|
$ |
5.0 |
|
|
Quarter Ended June 30, |
|||||
Portfolio Activity |
2019 |
2018 |
||||
Number of new portfolio companies |
22 |
5 |
||||
Investments in new portfolio companies |
$ |
40.8 |
$ |
44.2 |
||
Investments in existing portfolio companies |
$ |
18.4 |
$ |
2.8 |
||
Investments in structured finance notes |
5.6 |
$ |
— |
|||
Number of portfolio companies at end of period |
69 |
42 |
PORTFOLIO AND INVESTMENT ACTIVITIES
During the second 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 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 gains of
We recognized net gains of
We recognized net gains of
We recognized net losses of
LIQUIDITY AND CAPITAL RESOURCES
At
RECENT DEVELOPMENTS
Formation of Senior Loan Subsidiary
On
On
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
OFS Capital Corporation and Subsidiaries |
|||||||
Consolidated Statement of Assets and Liabilities |
|||||||
(Dollar amounts in thousands, except per share data) |
|||||||
|
June 30,
|
|
December 31,
|
||||
|
(unaudited) |
|
|
||||
Assets |
|
|
|
||||
Investments, at fair value: |
|
|
|
||||
Non-control/non-affiliate investments (amortized cost of $369,053 and $312,223, respectively) |
$ |
351,990 |
|
|
$ |
297,749 |
|
Affiliate investments (amortized cost of $123,105 and $90,751, respectively) |
121,997 |
|
|
89,103 |
|
||
Control investments (amortized cost of $10,400 and $10,337, respectively) |
10,731 |
|
|
9,945 |
|
||
Total investments at fair value (amortized cost of $502,558 and $413,311, respectively) |
484,718 |
|
|
396,797 |
|
||
Cash |
9,404 |
|
|
38,172 |
|
||
Interest receivable |
3,733 |
|
|
2,787 |
|
||
Receivable for investment sold |
2,003 |
|
|
— |
|
||
Prepaid expenses and other assets |
5,013 |
|
|
3,665 |
|
||
Total assets |
$ |
504,871 |
|
|
$ |
441,421 |
|
|
|
|
|
||||
Liabilities |
|
|
|
||||
Revolving line of credit |
$ |
38,250 |
|
|
$ |
12,000 |
|
SBA debentures (net of deferred debt issuance costs of $2,094 and $2,280, respectively) |
147,786 |
|
|
147,600 |
|
||
Unsecured notes (net of deferred debt issuance costs of $3,051 and $3,299 respectively) |
95,474 |
|
|
95,226 |
|
||
Interest payable |
2,677 |
|
|
2,791 |
|
||
Payable to adviser and affiliates |
3,850 |
|
|
3,700 |
|
||
Payable for investments purchased |
42,280 |
|
|
4,151 |
|
||
Accrued professional fees |
891 |
|
|
637 |
|
||
Other liabilities |
531 |
|
|
293 |
|
||
Total liabilities |
331,739 |
|
|
266,398 |
|
||
|
|
|
|
||||
Commitments and contingencies |
|
|
|
||||
|
|
|
|
||||
Net assets |
|
|
|
||||
Preferred stock, par value of $0.01 per share, 2,000,000 shares authorized, -0- shares |
|
|
|
|
|
||
issued and outstanding as of June 30, 2019, and December 31, 2018, respectively |
$ |
— |
$ |
— |
|||
Common stock, par value of $0.01 per share, 100,000,000 shares authorized, 13,366,461 |
|
|
|
|
|
||
and 13,357,337 shares issued and outstanding as of June 30, 2019, and
|
134 |
134 |
|||||
Paid-in capital in excess of par |
187,814 |
|
|
187,540 |
|
||
Total distributable earnings (losses) |
(14,816 |
) |
|
(12,651 |
) |
||
Total net assets |
173,132 |
|
|
175,023 |
|
||
|
|
|
|
||||
Total liabilities and net assets |
$ |
504,871 |
|
|
$ |
441,421 |
|
|
|
|
|
||||
Number of shares outstanding |
13,366,461 |
|
|
13,357,337 |
|
||
Net asset value per share |
$ |
12.95 |
|
|
$ |
13.10 |
|
OFS Capital Corporation and Subsidiaries |
|||||||||||||||
Condensed Consolidated Statements of Operations (unaudited) |
|||||||||||||||
(Dollar amounts in thousands, except per share data) |
|||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
Investment income |
|
|
|
|
|
|
|
||||||||
Interest income: |
|
|
|
|
|
|
|
||||||||
Non-control/non-affiliate investments |
$ |
9,287 |
|
|
$ |
6,326 |
|
|
$ |
17,929 |
|
|
$ |
12,084 |
|
Affiliate investments |
2,660 |
|
|
2,768 |
|
|
4,993 |
|
|
4,853 |
|
||||
Control investment |
263 |
|
|
250 |
|
|
522 |
|
|
489 |
|
||||
Total interest income |
12,210 |
|
|
9,344 |
|
|
23,444 |
|
|
17,426 |
|
||||
Payment-in-kind interest and dividend income: |
|
|
|
|
|
|
|
||||||||
Non-control/non-affiliate investments |
96 |
|
|
122 |
|
|
193 |
|
|
346 |
|
||||
Affiliate investments |
300 |
|
|
285 |
|
|
552 |
|
|
746 |
|
||||
Control investment |
28 |
|
|
27 |
|
|
55 |
|
|
54 |
|
||||
Total payment-in-kind interest and dividend income |
424 |
|
|
434 |
|
|
800 |
|
|
1,146 |
|
||||
Dividend income: |
|
|
|
|
|
|
|
||||||||
Affiliate investments |
— |
|
|
— |
|
|
173 |
|
|
130 |
|
||||
Control investment |
89 |
|
|
94 |
|
|
89 |
|
|
127 |
|
||||
Total dividend income |
89 |
|
|
94 |
|
|
262 |
|
|
257 |
|
||||
Fee income: |
|
|
|
|
|
|
|
||||||||
Non-control/non-affiliate investments |
154 |
|
|
387 |
|
|
496 |
|
|
413 |
|
||||
Affiliate investments |
5 |
|
|
3 |
|
|
210 |
|
|
5 |
|
||||
Control investment |
18 |
|
|
16 |
|
|
33 |
|
|
34 |
|
||||
Total fee income |
177 |
|
|
406 |
|
|
739 |
|
|
452 |
|
||||
Total investment income |
12,900 |
|
|
10,278 |
|
|
25,245 |
|
|
19,281 |
|
||||
Expenses |
|
|
|
|
|
|
|
||||||||
Interest and financing expense |
3,645 |
|
|
2,169 |
|
|
7,100 |
|
|
3,803 |
|
||||
Management fee |
2,055 |
|
|
1,548 |
|
|
3,898 |
|
|
2,908 |
|
||||
Incentive fee |
1,245 |
|
|
1,135 |
|
|
2,408 |
|
|
1,871 |
|
||||
Professional fees |
368 |
|
|
200 |
|
|
903 |
|
|
401 |
|
||||
Administration fee |
417 |
|
|
358 |
|
|
854 |
|
|
941 |
|
||||
Other expenses |
310 |
|
|
310 |
|
|
394 |
|
|
1,005 |
|
||||
Total expenses before incentive fee waiver |
8,040 |
|
|
5,720 |
|
|
15,557 |
|
|
10,929 |
|
||||
Incentive fee waiver |
— |
|
|
— |
|
|
— |
|
|
(22 |
) |
||||
Total expenses, net of incentive fee waiver |
8,040 |
|
|
5,720 |
|
|
15,557 |
|
|
10,907 |
|
||||
Net investment income |
4,860 |
|
|
4,558 |
|
|
9,688 |
|
|
8,374 |
|
||||
|
|
|
|
|
|
|
|
||||||||
Net realized and unrealized gain (loss) on investments |
|
|
|
|
|
|
|
||||||||
Net realized loss on non-control/non-affiliate investments |
(90 |
) |
|
(5,464 |
) |
|
(894 |
) |
|
(5,003 |
) |
||||
Net realized loss on affiliate investments |
— |
|
|
(3,477 |
) |
|
— |
|
|
(4,018 |
) |
||||
Net unrealized appreciation (depreciation) on non-control/non-affiliate investments, net of taxes |
(3,630 |
) |
|
5,411 |
|
|
(2,972 |
) |
|
3,848 |
|
||||
Net unrealized appreciation on affiliate investments |
1,660 |
|
|
3,928 |
|
|
540 |
|
|
5,173 |
|
||||
Net unrealized appreciation on control investment |
553 |
|
|
39 |
|
|
723 |
|
|
114 |
|
||||
|
|
|
|
|
|
|
|
||||||||
Net gain (loss) on investments |
(1,507 |
) |
|
437 |
|
|
(2,603 |
) |
|
114 |
|
||||
|
|
|
|
|
|
|
|
||||||||
Net increase in net assets resulting from operations |
$ |
3,353 |
|
|
$ |
4,995 |
|
|
$ |
7,085 |
|
|
$ |
8,488 |
|
|
|
|
|
|
|
|
|
||||||||
Net investment income per common share – basic and diluted |
$ |
0.36 |
|
|
$ |
0.34 |
|
|
$ |
0.73 |
|
|
$ |
0.63 |
|
Net increase in net assets resulting from operations per common share – basic and diluted |
$ |
0.25 |
|
|
$ |
0.37 |
|
|
$ |
0.53 |
|
|
$ |
0.64 |
|
Distributions declared per common share |
$ |
0.34 |
|
|
$ |
0.34 |
|
|
$ |
0.68 |
|
|
$ |
1.05 |
|
Basic and diluted weighted average shares outstanding |
13,361,193 |
|
|
13,348,793 |
|
|
13,359,338 |
|
|
13,344,670 |
|
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 belief that the BNP Facility will improve the Company's return on equity and the overall risk profile of its portfolio when there can be no assurance that such impact will occur; the belief that the breadth and skill set of OFS Advisor’s platform positions the Company to capitalize on investments across the corporate loan market; 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/20190802005073/en/
Source:
INVESTOR RELATIONS:
Steve Altebrando
646-652-8473
saltebrando@ofsmanagement.com