OFS Capital Corporation Announces Fourth Quarter and Full Year 2019 Financial Results
Fourth Quarter Net Investment Income of
Paid
FINANCIAL HIGHLIGHTS
-
Fourth quarter net investment income of
$4.6 million , or$0.34 per common share. -
Full year 2019 net investment income of
$19.1 million , or$1.43 per common share - an increase of 4% year-over-year and above the$1.36 regular distribution. -
Paid
$1.36 per share in distributions in 2019. -
Closed investments in the fourth quarter of approximately
$52.5 million . -
Net asset value ("NAV") per share decreased to
$12.46 atDecember 31, 2019 from$12.74 atSeptember 30, 2019 due to unrealized depreciation of the portfolio. -
At
December 31, 2019 , 90% of our loan portfolio consisted of senior secured loans, based on fair value. -
On
March 11, 2020 ,OFS Capital's Board of Directors declared a distribution of$0.34 per share for the first quarter of 2020, payable onMarch 31, 2020 to stockholders of record as ofMarch 24, 2020 .
"Our net investment income again covered our distribution," said
"We also remain focused on capital preservation. 90% of our total portfolio consisted of senior secured loans, based on our fair value, while our financing is long term and flexible. Our
HIGHLIGHTS ($ in millions, except for per share data) |
||||
Portfolio Overview |
|
At |
||
Total assets |
|
$ |
538.2 |
|
Investment portfolio, at fair value |
|
$ |
516.9 |
|
Net assets |
|
$ |
166.6 |
|
Net asset value per share |
|
$ |
12.46 |
|
Weighted average yield on performing debt investments (1) |
|
10.40 |
% |
|
Weighted average yield on total debt investments (2) |
|
9.94 |
% |
|
Weighted average yield on total investments (3) |
|
9.59 |
% |
The weighted average yield of investments is not the same as a return on investment for our stockholders but, rather, relates to portion of our investment portfolio and is calculated before the payment of all of our fees and expenses.
(1) |
The weighted average yield on our performing debt and structured finance note investments is computed as (a) the sum of 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) the sum of the amortized cost of our debt and structured finance note investments, in each case, excluding assets on non-accrual basis as of the balance sheet date. |
|
(2) |
The weighted average yield on total debt and structured finance note investments is computed as (a) the sum of 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) the sum of the amortized cost of our debt and structured finance note investments, in each base, 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 sum of 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, plus the effective cash yield on our performing preferred equity investments divided by (b) the sum of the amortized cost of our total investment portfolio, in each case, including assets on non-accrual basis as of the balance sheet date. |
|
|
Quarter Ended |
|
Year Ended |
||||||||||||
Operating Results |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
Total investment income |
|
$ |
13.4 |
|
|
$ |
12.6 |
|
|
$ |
52.5 |
|
|
$ |
42.8 |
|
Net investment income |
|
$ |
4.6 |
|
|
$ |
5.3 |
|
|
$ |
19.1 |
|
|
$ |
18.4 |
|
Net investment income per common share, basic and diluted |
|
$ |
0.34 |
|
|
$ |
0.40 |
|
|
$ |
1.43 |
|
|
$ |
1.38 |
|
Net increase (decrease) in net assets resulting from operations |
|
$ |
0.7 |
|
|
$ |
(4.1 |
) |
|
$ |
9.6 |
|
|
$ |
9.6 |
|
|
|
Quarter Ended |
|
Year Ended |
||||||||||||
Portfolio Activity |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
Number of new portfolio companies |
|
14 |
|
8 |
|
43 |
|
32 |
||||||||
Investments in new portfolio companies |
|
$ |
45.4 |
|
|
$ |
45.7 |
|
|
$ |
147.2 |
|
|
$ |
201.1 |
|
Investments in existing portfolio companies |
|
$ |
7.1 |
|
|
$ |
33.9 |
|
|
$ |
51.6 |
|
|
$ |
71.1 |
|
Investments in structured finance notes |
|
— |
|
|
— |
|
|
$ |
23.4 |
|
|
— |
|
|||
Number of portfolio companies at end of period |
|
85 |
|
50 |
|
85 |
|
50 |
PORTFOLIO AND INVESTMENT ACTIVITIES
During the fourth quarter of 2019, we closed fifteen senior secured debt investments in fourteen 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 consisted of prepayment fees of
Expenses
Interest expense
Interest expense increased by
Management Fees
Management fee expense increased by
Incentive Fees
Incentive fee expense increased by
We recognized net losses of
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
As part of our plans to focus on lower-yielding, first lien senior secured loans to larger borrowers, which we believe will improve our overall risk profile,
Additionally, as of
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
Consolidated Statements of Assets and Liabilities (Dollar amounts in thousands, except per share data) |
||||||||
|
|
|||||||
|
2019 |
|
2018 |
|||||
Assets |
|
|
|
|||||
Investments, at fair value |
|
|
|
|||||
Non-control/non-affiliate investments (amortized cost of |
$ |
372,535 |
|
|
$ |
297,749 |
|
|
Affiliate investments (amortized cost of |
135,679 |
|
|
89,103 |
|
|||
Control investment (amortized cost of |
8,717 |
|
|
9,945 |
|
|||
Total investments at fair value (amortized cost of |
516,931 |
|
|
396,797 |
|
|||
Cash and cash equivalents |
13,447 |
|
|
38,172 |
|
|||
Interest receivable |
3,349 |
|
|
2,787 |
|
|||
Prepaid expenses and other assets |
4,461 |
|
|
3,665 |
|
|||
Total assets |
$ |
538,188 |
|
|
$ |
441,421 |
|
|
|
|
|
|
|||||
Liabilities |
|
|
|
|||||
Revolving line of credits |
$ |
56,450 |
|
|
$ |
12,000 |
|
|
SBA debentures (net of deferred debt issuance costs of |
147,976 |
|
|
147,600 |
|
|||
Unsecured notes (net of discounts and deferred debt issuance costs of |
148,052 |
|
|
95,226 |
|
|||
Interest payable |
3,505 |
|
|
2,791 |
|
|||
Payable to investment adviser and affiliates |
4,106 |
|
|
3,700 |
|
|||
Payable for investments purchased |
10,264 |
|
|
4,151 |
|
|||
Accrued professional fees |
621 |
|
|
637 |
|
|||
Other liabilities |
587 |
|
|
293 |
|
|||
Total liabilities |
371,561 |
|
|
266,398 |
|
|||
|
|
|
|
|||||
Commitments and contingencies |
|
|
|
|||||
|
|
|
|
|||||
Net Assets |
|
|
|
|||||
Preferred stock, par value of |
— |
|
|
— |
|
|||
Common stock, par value of |
134 |
|
|
134 |
|
|||
Paid-in capital in excess of par |
187,305 |
|
|
187,540 |
|
|||
Total distributable earnings (accumulated losses) |
(20,812 |
) |
|
(12,651 |
) |
|||
Total net assets |
166,627 |
|
|
175,023 |
|
|||
|
|
|
|
|||||
Total liabilities and net assets |
$ |
538,188 |
|
|
$ |
441,421 |
|
|
|
|
|
|
|||||
Number of shares outstanding |
13,376,836 |
|
|
13,357,337 |
|
|||
Net asset value per share |
$ |
12.46 |
|
|
$ |
13.10 |
|
|
Consolidated Statements of Operations (Dollar amounts in thousands, except per share data) |
||||||||||||||||
|
Quarter Ended |
|
Year Ended |
|||||||||||||
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|||||||||
Investment income |
|
|
|
|
|
|
|
|||||||||
Interest income: |
|
|
|
|
|
|
|
|||||||||
Non-control/non-affiliate investments |
$ |
9,425 |
|
|
$ |
8,039 |
|
|
$ |
37,535 |
|
|
$ |
27,547 |
|
|
Affiliate investments |
2,724 |
|
|
2,747 |
|
|
10,364 |
|
|
10,055 |
|
|||||
Control investment |
219 |
|
|
261 |
|
|
1,003 |
|
|
1,005 |
|
|||||
Total interest income |
12,368 |
|
|
11,047 |
|
|
48,902 |
|
|
38,607 |
|
|||||
Payment-in-kind interest and dividend income: |
|
|
|
|
|
|
|
|||||||||
Non-control/non-affiliate investments |
110 |
|
|
144 |
|
|
399 |
|
|
668 |
|
|||||
Affiliate investments |
358 |
|
|
267 |
|
|
1,257 |
|
|
1,321 |
|
|||||
Control investment |
86 |
|
|
28 |
|
|
169 |
|
|
110 |
|
|||||
Total payment-in-kind interest and dividend income: |
554 |
|
|
439 |
|
|
1,825 |
|
|
2,099 |
|
|||||
Dividend income: |
|
|
|
|
|
|
|
|||||||||
Non-control/non-affiliate investments |
— |
|
|
— |
|
|
— |
|
|
— |
|
|||||
Affiliate investments |
240 |
|
|
— |
|
|
413 |
|
|
130 |
|
|||||
Control investment |
— |
|
|
— |
|
|
89 |
|
|
185 |
|
|||||
Total dividend income |
240 |
|
|
— |
|
|
502 |
|
|
315 |
|
|||||
Fee income: |
|
|
|
|
|
|
|
|||||||||
Non-control/non-affiliate investments |
248 |
|
|
323 |
|
|
1,029 |
|
|
987 |
|
|||||
Affiliate investments |
5 |
|
|
748 |
|
|
221 |
|
|
760 |
|
|||||
Control investment |
3 |
|
|
14 |
|
|
42 |
|
|
66 |
|
|||||
Total fee income |
256 |
|
|
1,085 |
|
|
1,292 |
|
|
1,813 |
|
|||||
Total investment income |
13,418 |
|
|
12,571 |
|
|
52,521 |
|
|
42,834 |
|
|||||
|
|
|
|
|
|
|
|
|||||||||
Expenses |
|
|
|
|
|
|
|
|||||||||
Interest and financing expense |
4,265 |
|
|
3,036 |
|
|
15,829 |
|
|
9,232 |
|
|||||
Management fees |
2,209 |
|
|
1,749 |
|
|
8,271 |
|
|
6,335 |
|
|||||
Incentive fees |
1,138 |
|
|
1,368 |
|
|
4,760 |
|
|
4,409 |
|
|||||
Professional fees |
401 |
|
|
386 |
|
|
1,814 |
|
|
1,245 |
|
|||||
Administration fees |
497 |
|
|
349 |
|
|
1,747 |
|
|
1,601 |
|
|||||
Other expenses |
351 |
|
|
362 |
|
|
1,002 |
|
|
1,649 |
|
|||||
Total expenses before incentive fee waiver |
8,861 |
|
|
7,250 |
|
|
33,423 |
|
|
24,471 |
|
|||||
Incentive fee waiver |
— |
|
|
— |
|
|
— |
|
|
(22 |
) |
|||||
Total expenses, net of incentive fee waiver |
8,861 |
|
|
7,250 |
|
|
33,423 |
|
|
24,449 |
|
|||||
Net investment income |
4,557 |
|
|
5,321 |
|
|
19,098 |
|
|
18,385 |
|
|||||
|
|
|
|
|
|
|
|
|||||||||
Net realized and unrealized gain (loss) on investments |
|
|
|
|
|
|
|
|||||||||
Net realized loss on non-control/non-affiliate investments |
(3,057 |
) |
|
37 |
|
|
(3,900 |
) |
|
(4,966 |
) |
|||||
Net realized gain on affiliate investments |
— |
|
|
4,205 |
|
|
— |
|
|
187 |
|
|||||
Net unrealized depreciation on non-control/non-affiliate investments |
(104 |
) |
|
(5,409 |
) |
|
(9,610 |
) |
|
(2,484 |
) |
|||||
Net unrealized appreciation (depreciation) on affiliate investments |
71 |
|
|
(7,199 |
) |
|
5,376 |
|
|
(803 |
) |
|||||
Net unrealized depreciation on control investment |
(761 |
) |
|
(1,050 |
) |
|
(1,411 |
) |
|
(747 |
) |
|||||
Net loss on investments |
(3,851 |
) |
|
(9,416 |
) |
|
(9,545 |
) |
|
(8,813 |
) |
|||||
|
|
|
|
|
|
|
|
|||||||||
Net increase in net assets resulting from operations |
$ |
706 |
|
|
$ |
(4,095 |
) |
|
$ |
9,553 |
|
|
$ |
9,572 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Net investment income per common share - basic and diluted |
$ |
0.34 |
|
|
$ |
0.40 |
|
|
$ |
1.43 |
|
|
$ |
1.38 |
|
|
Net increase in net assets resulting from operations per common share - basic and diluted |
$ |
0.05 |
|
|
$ |
(0.31 |
) |
|
$ |
0.71 |
|
|
$ |
0.72 |
|
|
Distributions declared per common share |
$ |
0.34 |
|
|
$ |
0.34 |
|
|
$ |
1.36 |
|
|
$ |
1.73 |
|
|
Basic and diluted weighted average shares outstanding |
13,371,510 |
|
|
13,352,873 |
|
|
13,364,244 |
|
|
13,348,203 |
|
|||||
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; management’s plans to focus on capital preservation and belief that the Company is well positioned for the future; management’s plans to focus on lower-yielding, first lien senior secured loans to larger borrowers and the potential impact of that plan on the Company’s overall risk profile; SBIC I LP’s intention to repay its outstanding SBA debentures prior to their scheduled maturity dates; the expectation that any future investments by
1 Registration does not imply a certain level of skill or training.
View source version on businesswire.com: https://www.businesswire.com/news/home/20200313005082/en/
INVESTOR RELATIONS CONTACT:
646-652-8473
saltebrando@ofsmanagement.com
Source: