Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries OFS Capital Corporation Announces Second Quarter 2023 Financial Results By: OFS Capital Corporation via Business Wire August 03, 2023 at 16:30 PM EDT Third Quarter Distribution Increased to $0.34 Per Share OFS Capital Corporation (NASDAQ: OFS) (“OFS Capital,” the “Company,” “we,” “us,” or “our”) today announced its financial results for the fiscal quarter ended June 30, 2023. SECOND QUARTER FINANCIAL HIGHLIGHTS Net investment income of $0.38 per common share for the quarter ended June 30, 2023, an increase from $0.37 per common share for the quarter ended March 31, 2023. Net loss on investments of $0.53 per common share; no new non-accrual loans during the quarter. Net asset value (“NAV”) per common share of $12.94, as of June 30, 2023. As of June 30, 2023, based on fair value, 95% of our loan portfolio consisted of floating rate loans and approximately 99% of our loan portfolio consisted of senior secured loans. For the quarter ended June 30, 2023, the investment portfolio’s weighted-average performing income yield increased to 13.8% from 13.0% during the prior quarter. On June 30, 2023, we paid a quarterly distribution of $0.33 per common share, and, on August 1, 2023, our Board of Directors declared a distribution of $0.34 per common share for the third quarter of 2023, a 3.0% increase compared to the prior quarter distribution, payable on September 29, 2023 to stockholders of record as of September 22, 2023. SELECTED FINANCIAL HIGHLIGHTS (unaudited) Three Months Ended (Per common share) June 30, 2023 March 31, 2023 Net Investment Income Net investment income $ 0.38 $ 0.37 Net Realized/Unrealized Gain (Loss) Net realized loss on investments(1) $ (0.78 ) $ — Net unrealized appreciation (depreciation) on investments 0.25 (0.09 ) Net loss on investments $ (0.53 ) $ (0.09 ) Earnings (Loss) Earnings (loss) $ (0.15 ) $ 0.28 Net Asset Value Net asset value $ 12.94 $ 13.42 Distributions paid $ 0.33 $ 0.33 As of (in millions) June 30, 2023 March 31, 2023 Balance Sheet Highlights (unaudited) Investment portfolio, at fair value $ 494.6 $ 499.8 Total assets 505.9 515.5 Net assets 173.4 179.8 (1) For the quarter ended March 31, 2023, net realized loss rounds to an amount of less than $0.01 per common share. “We are pleased to announce a distribution increase for the third quarter of 2023,” said Bilal Rashid, OFS Capital’s Chairman and Chief Executive Officer. “Today we reported another increase in our quarterly net investment income, which rose to $0.38 per common share, and was the third consecutive increase in our quarterly net investment income. We believe our balance sheet is well positioned in the current interest rate environment with the vast majority of our loan portfolio being floating rate and the majority of our debt being fixed-rate. At the end of the second quarter, approximately 86% of our outstanding debt matures in 2026 or later, and more than half of our outstanding debt is unsecured.” PORTFOLIO AND INVESTMENT ACTIVITIES ($ in millions) As of and for the Three Months Ended Portfolio Overview June 30, 2023 March 31, 2023 Average performing interest-bearing investments, at cost $ 406.5 $ 410.0 Weighted-average performing income yield - interest-bearing investments(2) 13.8 % 13.0 % Weighted-average realized yield - interest-bearing investments(3) 12.5 % 11.8 % The weighted-average yield of our investments is not the same as a return on investment for our stockholders, but rather relates to our investment portfolio and is calculated before the payment of all of our fees and expenses. (2) Performing income yield is calculated as (a) the actual amount earned on performing interest-bearing investments, including interest, prepayment fees and amortization of net loan fees, divided by (b) the weighted-average of total performing interest-bearing investments at amortized cost. (3) Realized yield is calculated as (a) the actual amount earned on interest-bearing investments, including interest, prepayment fees and amortization of net loan fees, divided by (b) the weighted-average of total interest-bearing investments at amortized cost, in each case, including debt investments on non-accrual status and non-income producing structured finance securities. Three Months Ended Portfolio Activity June 30, 2023 March 31, 2023 Investments in debt and equity investments $ 16.4 $ 9.9 Investments in structured finance securities — — As of June 30, 2023, based on fair value, our investment portfolio was comprised of the following: Total investments of $494.6 million, which was equal to approximately 106% of amortized cost; Debt investments of $313.0 million in 44 portfolio companies; Equity investments of $99.6 million in 16 portfolio companies; Structured finance securities of $81.9 million in 23 investments; and Unfunded commitments of $15.8 million to 10 portfolio companies. During the quarter ended June 30, 2023, no new loans were placed on non-accrual status. RESULTS OF OPERATIONS Investment Income For the quarter ended June 30, 2023, total investment income increased to $14.5 million from $14.3 million in the prior quarter, primarily due to an increase in total interest income of $0.7 million. The increase in interest income was primarily due to an increase in our portfolio’s weighted-average performing income yield to 13.8% for the quarter ended June 30, 2023 from 13.0% in the prior quarter. Expenses For the quarter ended June 30, 2023, total expenses increased by $0.1 million to $9.4 million compared to the prior quarter, primarily due to an increase in interest expense stemming from increasing interest rates on our variable rate revolving credit facility with BNP Paribas. Net Gain (Loss) on Investments For the quarter ended June 30, 2023, we recognized a net loss on investments of $7.1 million, primarily due to unrealized depreciation of $4.3 million and $2.7 million on our structured finance securities and equity securities, respectively. For the quarter ended June 30, 2023, our loan portfolio experienced net gains of $1.0 million. During the quarter ended June 30, 2023, we wrote-off a non-accrual loan and equity investment resulting in a loss of $0.4 million, net of the reversal of previously recognized unrealized depreciation, and a gross realized loss of $10.5 million on our invested capital. LIQUIDITY AND CAPITAL RESOURCES As of June 30, 2023, we had $6.8 million in cash, which includes $1.4 million held by our wholly owned small business investment company, OFS SBIC I, LP (“SBIC I LP”), and $3.5 million held by OFSCC-FS, LLC (“OFSCC-FS”), an indirect wholly owned subsidiary. Our use of cash held by SBIC I LP and OFSCC-FS is restricted by regulatory and/or contractual conditions, including limitations on the amount of cash SBIC I LP and OFSCC-FS can distribute to us. As of June 30, 2023, we had an unused commitment of $24.5 million under our senior secured revolving credit facility with Pacific Western Bank, as well as an unused commitment of $48.9 million under our revolving credit facility with BNP Paribas, both of which are subject to borrowing base requirements and other covenants. As of June 30, 2023, we had outstanding commitments to fund investments totaling $15.8 million under various undrawn revolvers and other credit facilities. CONFERENCE CALL OFS Capital will host a conference call to discuss these results on Friday, August 4, 2023, at 10:00 AM Eastern Time. Interested parties may participate in the call via the following: 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 (844) 763-8274 (Domestic) or (412) 717-9224 (International) approximately 15 minutes prior to the call. A telephone replay of the conference call will be available through August 18, 2023 and may be accessed by calling (877) 344-7529 (Domestic) or (412) 317-0088 (International) and utilizing conference ID #1478311. 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 June 30, 2023. OFS Capital Corporation and Subsidiaries Consolidated Statements of Assets and Liabilities (Dollar amounts in thousands, except per share data) June 30, 2023 December 31, 2022 (unaudited) Assets Total investments, at fair value (amortized cost of $466,684 and $474,880, respectively) $ 494,579 $ 500,576 Cash 6,829 14,937 Interest receivable 2,322 2,202 Prepaid expenses and other assets 2,176 3,002 Total assets $ 505,906 $ 520,717 Liabilities Revolving lines of credit $ 101,600 $ 104,700 SBA debentures (net of deferred debt issuance costs of $115 and $223, respectively) 45,805 50,697 Unsecured Notes (net of deferred debt issuance costs of $3,157 and $3,647, respectively) 176,843 176,353 Interest payable 3,928 3,947 Payable to adviser and affiliates 3,732 3,909 Accrued professional fees 344 444 Other liabilities 232 244 Total liabilities 332,484 340,294 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, 2023 and December 31, 2022, respectively $ — $ — Common stock, par value of $0.01 per share, 100,000,000 shares authorized, 13,398,078 and 13,398,078 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively 134 134 Paid-in capital in excess of par 184,841 184,841 Total distributable earnings (losses) (11,553 ) (4,552 ) Total net assets 173,422 180,423 Total liabilities and net assets $ 505,906 $ 520,717 Number of shares outstanding 13,398,078 13,398,078 Net asset value per share $ 12.94 $ 13.47 OFS Capital Corporation and Subsidiaries Consolidated Statements of Operations (unaudited) (Dollar amounts in thousands, except per share data) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Investment income Interest income $ 14,101 $ 10,345 $ 27,494 $ 20,188 Dividend income 334 5 1,119 763 Fee income 91 82 196 427 Total investment income 14,526 10,432 28,809 21,378 Expenses Interest expense 5,011 3,943 9,885 7,567 Management fee 1,883 2,056 3,777 4,076 Income Incentive Fee 1,280 — 2,518 — Capital Gains Fee — (2,988 ) — (1,916 ) Professional fees 429 352 865 759 Administration fee 440 423 922 874 Other expenses 360 398 769 765 Total expenses 9,403 4,184 18,736 12,125 Net investment income 5,123 6,248 10,073 9,253 Net realized and unrealized gain (loss) on investments Net realized gain (loss), net of taxes (10,408 ) (190 ) (10,412 ) 27 Net unrealized appreciation (depreciation), net of taxes 3,321 (14,882 ) 2,200 (9,599 ) Net loss on investments (7,087 ) (15,072 ) (8,212 ) (9,572 ) Loss on extinguishment of debt — — (19 ) (144 ) Net increase (decrease) in net assets resulting from operations $ (1,964 ) $ (8,824 ) $ 1,842 $ (463 ) Net investment income per common share – basic and diluted $ 0.38 $ 0.47 $ 0.75 $ 0.69 Net increase (decrease) in net assets resulting from operations per common share – basic and diluted $ (0.15 ) $ (0.66 ) $ 0.13 $ (0.03 ) Distributions declared per common share $ 0.33 $ 0.29 $ 0.66 $ 0.57 Basic and diluted weighted average shares outstanding 13,398,078 13,425,477 13,398,078 13,423,970 ABOUT OFS CAPITAL 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 the United States, including lower-middle-market companies, targeting investments of $3 million to $20 million in companies with annual EBITDA between $5 million and $50 million. The Company offers flexible solutions through a variety of asset classes including senior secured loans, which includes first-lien, second-lien and unitranche loans, as well as subordinated loans and, to a lesser extent, warrants and other equity securities. The Company's investment activities are managed by OFS Capital Management, LLC, an investment adviser registered under the Investment Advisers Act of 1940(4), as amended, and headquartered in Chicago, Illinois, with additional offices in New York and Los Angeles. 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 Company’s balance sheet is well positioned in the current interest rate environment due to a high percentage of floating rate loans in the portfolio and a majority of liabilities that have a fixed rate of interest, when there can be no assurance that such a composition will lead to future success; 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 December 31, 2022 filed with the Securities and Exchange Commission under the section “Risk Factors,” and in “Part II, Item 1A. Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, as well as other documents that may be filed by OFS Capital from time to time with the Securities and Exchange Commission. As a result of such risks, uncertainties and factors, actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. OFS Capital is providing the information in this press release as of this date and assumes no obligations to update the information included in this press release or revise any forward-looking statements, whether as a result of new information, future events or otherwise. (4) Registration does not imply a certain level of skill or training View source version on businesswire.com: https://www.businesswire.com/news/home/20230803666404/en/Contacts INVESTOR RELATIONS CONTACT: Steve Altebrando 646-652-8473 saltebrando@ofsmanagement.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
OFS Capital Corporation Announces Second Quarter 2023 Financial Results By: OFS Capital Corporation via Business Wire August 03, 2023 at 16:30 PM EDT Third Quarter Distribution Increased to $0.34 Per Share OFS Capital Corporation (NASDAQ: OFS) (“OFS Capital,” the “Company,” “we,” “us,” or “our”) today announced its financial results for the fiscal quarter ended June 30, 2023. SECOND QUARTER FINANCIAL HIGHLIGHTS Net investment income of $0.38 per common share for the quarter ended June 30, 2023, an increase from $0.37 per common share for the quarter ended March 31, 2023. Net loss on investments of $0.53 per common share; no new non-accrual loans during the quarter. Net asset value (“NAV”) per common share of $12.94, as of June 30, 2023. As of June 30, 2023, based on fair value, 95% of our loan portfolio consisted of floating rate loans and approximately 99% of our loan portfolio consisted of senior secured loans. For the quarter ended June 30, 2023, the investment portfolio’s weighted-average performing income yield increased to 13.8% from 13.0% during the prior quarter. On June 30, 2023, we paid a quarterly distribution of $0.33 per common share, and, on August 1, 2023, our Board of Directors declared a distribution of $0.34 per common share for the third quarter of 2023, a 3.0% increase compared to the prior quarter distribution, payable on September 29, 2023 to stockholders of record as of September 22, 2023. SELECTED FINANCIAL HIGHLIGHTS (unaudited) Three Months Ended (Per common share) June 30, 2023 March 31, 2023 Net Investment Income Net investment income $ 0.38 $ 0.37 Net Realized/Unrealized Gain (Loss) Net realized loss on investments(1) $ (0.78 ) $ — Net unrealized appreciation (depreciation) on investments 0.25 (0.09 ) Net loss on investments $ (0.53 ) $ (0.09 ) Earnings (Loss) Earnings (loss) $ (0.15 ) $ 0.28 Net Asset Value Net asset value $ 12.94 $ 13.42 Distributions paid $ 0.33 $ 0.33 As of (in millions) June 30, 2023 March 31, 2023 Balance Sheet Highlights (unaudited) Investment portfolio, at fair value $ 494.6 $ 499.8 Total assets 505.9 515.5 Net assets 173.4 179.8 (1) For the quarter ended March 31, 2023, net realized loss rounds to an amount of less than $0.01 per common share. “We are pleased to announce a distribution increase for the third quarter of 2023,” said Bilal Rashid, OFS Capital’s Chairman and Chief Executive Officer. “Today we reported another increase in our quarterly net investment income, which rose to $0.38 per common share, and was the third consecutive increase in our quarterly net investment income. We believe our balance sheet is well positioned in the current interest rate environment with the vast majority of our loan portfolio being floating rate and the majority of our debt being fixed-rate. At the end of the second quarter, approximately 86% of our outstanding debt matures in 2026 or later, and more than half of our outstanding debt is unsecured.” PORTFOLIO AND INVESTMENT ACTIVITIES ($ in millions) As of and for the Three Months Ended Portfolio Overview June 30, 2023 March 31, 2023 Average performing interest-bearing investments, at cost $ 406.5 $ 410.0 Weighted-average performing income yield - interest-bearing investments(2) 13.8 % 13.0 % Weighted-average realized yield - interest-bearing investments(3) 12.5 % 11.8 % The weighted-average yield of our investments is not the same as a return on investment for our stockholders, but rather relates to our investment portfolio and is calculated before the payment of all of our fees and expenses. (2) Performing income yield is calculated as (a) the actual amount earned on performing interest-bearing investments, including interest, prepayment fees and amortization of net loan fees, divided by (b) the weighted-average of total performing interest-bearing investments at amortized cost. (3) Realized yield is calculated as (a) the actual amount earned on interest-bearing investments, including interest, prepayment fees and amortization of net loan fees, divided by (b) the weighted-average of total interest-bearing investments at amortized cost, in each case, including debt investments on non-accrual status and non-income producing structured finance securities. Three Months Ended Portfolio Activity June 30, 2023 March 31, 2023 Investments in debt and equity investments $ 16.4 $ 9.9 Investments in structured finance securities — — As of June 30, 2023, based on fair value, our investment portfolio was comprised of the following: Total investments of $494.6 million, which was equal to approximately 106% of amortized cost; Debt investments of $313.0 million in 44 portfolio companies; Equity investments of $99.6 million in 16 portfolio companies; Structured finance securities of $81.9 million in 23 investments; and Unfunded commitments of $15.8 million to 10 portfolio companies. During the quarter ended June 30, 2023, no new loans were placed on non-accrual status. RESULTS OF OPERATIONS Investment Income For the quarter ended June 30, 2023, total investment income increased to $14.5 million from $14.3 million in the prior quarter, primarily due to an increase in total interest income of $0.7 million. The increase in interest income was primarily due to an increase in our portfolio’s weighted-average performing income yield to 13.8% for the quarter ended June 30, 2023 from 13.0% in the prior quarter. Expenses For the quarter ended June 30, 2023, total expenses increased by $0.1 million to $9.4 million compared to the prior quarter, primarily due to an increase in interest expense stemming from increasing interest rates on our variable rate revolving credit facility with BNP Paribas. Net Gain (Loss) on Investments For the quarter ended June 30, 2023, we recognized a net loss on investments of $7.1 million, primarily due to unrealized depreciation of $4.3 million and $2.7 million on our structured finance securities and equity securities, respectively. For the quarter ended June 30, 2023, our loan portfolio experienced net gains of $1.0 million. During the quarter ended June 30, 2023, we wrote-off a non-accrual loan and equity investment resulting in a loss of $0.4 million, net of the reversal of previously recognized unrealized depreciation, and a gross realized loss of $10.5 million on our invested capital. LIQUIDITY AND CAPITAL RESOURCES As of June 30, 2023, we had $6.8 million in cash, which includes $1.4 million held by our wholly owned small business investment company, OFS SBIC I, LP (“SBIC I LP”), and $3.5 million held by OFSCC-FS, LLC (“OFSCC-FS”), an indirect wholly owned subsidiary. Our use of cash held by SBIC I LP and OFSCC-FS is restricted by regulatory and/or contractual conditions, including limitations on the amount of cash SBIC I LP and OFSCC-FS can distribute to us. As of June 30, 2023, we had an unused commitment of $24.5 million under our senior secured revolving credit facility with Pacific Western Bank, as well as an unused commitment of $48.9 million under our revolving credit facility with BNP Paribas, both of which are subject to borrowing base requirements and other covenants. As of June 30, 2023, we had outstanding commitments to fund investments totaling $15.8 million under various undrawn revolvers and other credit facilities. CONFERENCE CALL OFS Capital will host a conference call to discuss these results on Friday, August 4, 2023, at 10:00 AM Eastern Time. Interested parties may participate in the call via the following: 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 (844) 763-8274 (Domestic) or (412) 717-9224 (International) approximately 15 minutes prior to the call. A telephone replay of the conference call will be available through August 18, 2023 and may be accessed by calling (877) 344-7529 (Domestic) or (412) 317-0088 (International) and utilizing conference ID #1478311. 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 June 30, 2023. OFS Capital Corporation and Subsidiaries Consolidated Statements of Assets and Liabilities (Dollar amounts in thousands, except per share data) June 30, 2023 December 31, 2022 (unaudited) Assets Total investments, at fair value (amortized cost of $466,684 and $474,880, respectively) $ 494,579 $ 500,576 Cash 6,829 14,937 Interest receivable 2,322 2,202 Prepaid expenses and other assets 2,176 3,002 Total assets $ 505,906 $ 520,717 Liabilities Revolving lines of credit $ 101,600 $ 104,700 SBA debentures (net of deferred debt issuance costs of $115 and $223, respectively) 45,805 50,697 Unsecured Notes (net of deferred debt issuance costs of $3,157 and $3,647, respectively) 176,843 176,353 Interest payable 3,928 3,947 Payable to adviser and affiliates 3,732 3,909 Accrued professional fees 344 444 Other liabilities 232 244 Total liabilities 332,484 340,294 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, 2023 and December 31, 2022, respectively $ — $ — Common stock, par value of $0.01 per share, 100,000,000 shares authorized, 13,398,078 and 13,398,078 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively 134 134 Paid-in capital in excess of par 184,841 184,841 Total distributable earnings (losses) (11,553 ) (4,552 ) Total net assets 173,422 180,423 Total liabilities and net assets $ 505,906 $ 520,717 Number of shares outstanding 13,398,078 13,398,078 Net asset value per share $ 12.94 $ 13.47 OFS Capital Corporation and Subsidiaries Consolidated Statements of Operations (unaudited) (Dollar amounts in thousands, except per share data) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Investment income Interest income $ 14,101 $ 10,345 $ 27,494 $ 20,188 Dividend income 334 5 1,119 763 Fee income 91 82 196 427 Total investment income 14,526 10,432 28,809 21,378 Expenses Interest expense 5,011 3,943 9,885 7,567 Management fee 1,883 2,056 3,777 4,076 Income Incentive Fee 1,280 — 2,518 — Capital Gains Fee — (2,988 ) — (1,916 ) Professional fees 429 352 865 759 Administration fee 440 423 922 874 Other expenses 360 398 769 765 Total expenses 9,403 4,184 18,736 12,125 Net investment income 5,123 6,248 10,073 9,253 Net realized and unrealized gain (loss) on investments Net realized gain (loss), net of taxes (10,408 ) (190 ) (10,412 ) 27 Net unrealized appreciation (depreciation), net of taxes 3,321 (14,882 ) 2,200 (9,599 ) Net loss on investments (7,087 ) (15,072 ) (8,212 ) (9,572 ) Loss on extinguishment of debt — — (19 ) (144 ) Net increase (decrease) in net assets resulting from operations $ (1,964 ) $ (8,824 ) $ 1,842 $ (463 ) Net investment income per common share – basic and diluted $ 0.38 $ 0.47 $ 0.75 $ 0.69 Net increase (decrease) in net assets resulting from operations per common share – basic and diluted $ (0.15 ) $ (0.66 ) $ 0.13 $ (0.03 ) Distributions declared per common share $ 0.33 $ 0.29 $ 0.66 $ 0.57 Basic and diluted weighted average shares outstanding 13,398,078 13,425,477 13,398,078 13,423,970 ABOUT OFS CAPITAL 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 the United States, including lower-middle-market companies, targeting investments of $3 million to $20 million in companies with annual EBITDA between $5 million and $50 million. The Company offers flexible solutions through a variety of asset classes including senior secured loans, which includes first-lien, second-lien and unitranche loans, as well as subordinated loans and, to a lesser extent, warrants and other equity securities. The Company's investment activities are managed by OFS Capital Management, LLC, an investment adviser registered under the Investment Advisers Act of 1940(4), as amended, and headquartered in Chicago, Illinois, with additional offices in New York and Los Angeles. 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 Company’s balance sheet is well positioned in the current interest rate environment due to a high percentage of floating rate loans in the portfolio and a majority of liabilities that have a fixed rate of interest, when there can be no assurance that such a composition will lead to future success; 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 December 31, 2022 filed with the Securities and Exchange Commission under the section “Risk Factors,” and in “Part II, Item 1A. Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, as well as other documents that may be filed by OFS Capital from time to time with the Securities and Exchange Commission. As a result of such risks, uncertainties and factors, actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. OFS Capital is providing the information in this press release as of this date and assumes no obligations to update the information included in this press release or revise any forward-looking statements, whether as a result of new information, future events or otherwise. (4) Registration does not imply a certain level of skill or training View source version on businesswire.com: https://www.businesswire.com/news/home/20230803666404/en/Contacts INVESTOR RELATIONS CONTACT: Steve Altebrando 646-652-8473 saltebrando@ofsmanagement.com
OFS Capital Corporation (NASDAQ: OFS) (“OFS Capital,” the “Company,” “we,” “us,” or “our”) today announced its financial results for the fiscal quarter ended June 30, 2023. SECOND QUARTER FINANCIAL HIGHLIGHTS Net investment income of $0.38 per common share for the quarter ended June 30, 2023, an increase from $0.37 per common share for the quarter ended March 31, 2023. Net loss on investments of $0.53 per common share; no new non-accrual loans during the quarter. Net asset value (“NAV”) per common share of $12.94, as of June 30, 2023. As of June 30, 2023, based on fair value, 95% of our loan portfolio consisted of floating rate loans and approximately 99% of our loan portfolio consisted of senior secured loans. For the quarter ended June 30, 2023, the investment portfolio’s weighted-average performing income yield increased to 13.8% from 13.0% during the prior quarter. On June 30, 2023, we paid a quarterly distribution of $0.33 per common share, and, on August 1, 2023, our Board of Directors declared a distribution of $0.34 per common share for the third quarter of 2023, a 3.0% increase compared to the prior quarter distribution, payable on September 29, 2023 to stockholders of record as of September 22, 2023. SELECTED FINANCIAL HIGHLIGHTS (unaudited) Three Months Ended (Per common share) June 30, 2023 March 31, 2023 Net Investment Income Net investment income $ 0.38 $ 0.37 Net Realized/Unrealized Gain (Loss) Net realized loss on investments(1) $ (0.78 ) $ — Net unrealized appreciation (depreciation) on investments 0.25 (0.09 ) Net loss on investments $ (0.53 ) $ (0.09 ) Earnings (Loss) Earnings (loss) $ (0.15 ) $ 0.28 Net Asset Value Net asset value $ 12.94 $ 13.42 Distributions paid $ 0.33 $ 0.33 As of (in millions) June 30, 2023 March 31, 2023 Balance Sheet Highlights (unaudited) Investment portfolio, at fair value $ 494.6 $ 499.8 Total assets 505.9 515.5 Net assets 173.4 179.8 (1) For the quarter ended March 31, 2023, net realized loss rounds to an amount of less than $0.01 per common share. “We are pleased to announce a distribution increase for the third quarter of 2023,” said Bilal Rashid, OFS Capital’s Chairman and Chief Executive Officer. “Today we reported another increase in our quarterly net investment income, which rose to $0.38 per common share, and was the third consecutive increase in our quarterly net investment income. We believe our balance sheet is well positioned in the current interest rate environment with the vast majority of our loan portfolio being floating rate and the majority of our debt being fixed-rate. At the end of the second quarter, approximately 86% of our outstanding debt matures in 2026 or later, and more than half of our outstanding debt is unsecured.” PORTFOLIO AND INVESTMENT ACTIVITIES ($ in millions) As of and for the Three Months Ended Portfolio Overview June 30, 2023 March 31, 2023 Average performing interest-bearing investments, at cost $ 406.5 $ 410.0 Weighted-average performing income yield - interest-bearing investments(2) 13.8 % 13.0 % Weighted-average realized yield - interest-bearing investments(3) 12.5 % 11.8 % The weighted-average yield of our investments is not the same as a return on investment for our stockholders, but rather relates to our investment portfolio and is calculated before the payment of all of our fees and expenses. (2) Performing income yield is calculated as (a) the actual amount earned on performing interest-bearing investments, including interest, prepayment fees and amortization of net loan fees, divided by (b) the weighted-average of total performing interest-bearing investments at amortized cost. (3) Realized yield is calculated as (a) the actual amount earned on interest-bearing investments, including interest, prepayment fees and amortization of net loan fees, divided by (b) the weighted-average of total interest-bearing investments at amortized cost, in each case, including debt investments on non-accrual status and non-income producing structured finance securities. Three Months Ended Portfolio Activity June 30, 2023 March 31, 2023 Investments in debt and equity investments $ 16.4 $ 9.9 Investments in structured finance securities — — As of June 30, 2023, based on fair value, our investment portfolio was comprised of the following: Total investments of $494.6 million, which was equal to approximately 106% of amortized cost; Debt investments of $313.0 million in 44 portfolio companies; Equity investments of $99.6 million in 16 portfolio companies; Structured finance securities of $81.9 million in 23 investments; and Unfunded commitments of $15.8 million to 10 portfolio companies. During the quarter ended June 30, 2023, no new loans were placed on non-accrual status. RESULTS OF OPERATIONS Investment Income For the quarter ended June 30, 2023, total investment income increased to $14.5 million from $14.3 million in the prior quarter, primarily due to an increase in total interest income of $0.7 million. The increase in interest income was primarily due to an increase in our portfolio’s weighted-average performing income yield to 13.8% for the quarter ended June 30, 2023 from 13.0% in the prior quarter. Expenses For the quarter ended June 30, 2023, total expenses increased by $0.1 million to $9.4 million compared to the prior quarter, primarily due to an increase in interest expense stemming from increasing interest rates on our variable rate revolving credit facility with BNP Paribas. Net Gain (Loss) on Investments For the quarter ended June 30, 2023, we recognized a net loss on investments of $7.1 million, primarily due to unrealized depreciation of $4.3 million and $2.7 million on our structured finance securities and equity securities, respectively. For the quarter ended June 30, 2023, our loan portfolio experienced net gains of $1.0 million. During the quarter ended June 30, 2023, we wrote-off a non-accrual loan and equity investment resulting in a loss of $0.4 million, net of the reversal of previously recognized unrealized depreciation, and a gross realized loss of $10.5 million on our invested capital. LIQUIDITY AND CAPITAL RESOURCES As of June 30, 2023, we had $6.8 million in cash, which includes $1.4 million held by our wholly owned small business investment company, OFS SBIC I, LP (“SBIC I LP”), and $3.5 million held by OFSCC-FS, LLC (“OFSCC-FS”), an indirect wholly owned subsidiary. Our use of cash held by SBIC I LP and OFSCC-FS is restricted by regulatory and/or contractual conditions, including limitations on the amount of cash SBIC I LP and OFSCC-FS can distribute to us. As of June 30, 2023, we had an unused commitment of $24.5 million under our senior secured revolving credit facility with Pacific Western Bank, as well as an unused commitment of $48.9 million under our revolving credit facility with BNP Paribas, both of which are subject to borrowing base requirements and other covenants. As of June 30, 2023, we had outstanding commitments to fund investments totaling $15.8 million under various undrawn revolvers and other credit facilities. CONFERENCE CALL OFS Capital will host a conference call to discuss these results on Friday, August 4, 2023, at 10:00 AM Eastern Time. Interested parties may participate in the call via the following: 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 (844) 763-8274 (Domestic) or (412) 717-9224 (International) approximately 15 minutes prior to the call. A telephone replay of the conference call will be available through August 18, 2023 and may be accessed by calling (877) 344-7529 (Domestic) or (412) 317-0088 (International) and utilizing conference ID #1478311. 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 June 30, 2023. OFS Capital Corporation and Subsidiaries Consolidated Statements of Assets and Liabilities (Dollar amounts in thousands, except per share data) June 30, 2023 December 31, 2022 (unaudited) Assets Total investments, at fair value (amortized cost of $466,684 and $474,880, respectively) $ 494,579 $ 500,576 Cash 6,829 14,937 Interest receivable 2,322 2,202 Prepaid expenses and other assets 2,176 3,002 Total assets $ 505,906 $ 520,717 Liabilities Revolving lines of credit $ 101,600 $ 104,700 SBA debentures (net of deferred debt issuance costs of $115 and $223, respectively) 45,805 50,697 Unsecured Notes (net of deferred debt issuance costs of $3,157 and $3,647, respectively) 176,843 176,353 Interest payable 3,928 3,947 Payable to adviser and affiliates 3,732 3,909 Accrued professional fees 344 444 Other liabilities 232 244 Total liabilities 332,484 340,294 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, 2023 and December 31, 2022, respectively $ — $ — Common stock, par value of $0.01 per share, 100,000,000 shares authorized, 13,398,078 and 13,398,078 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively 134 134 Paid-in capital in excess of par 184,841 184,841 Total distributable earnings (losses) (11,553 ) (4,552 ) Total net assets 173,422 180,423 Total liabilities and net assets $ 505,906 $ 520,717 Number of shares outstanding 13,398,078 13,398,078 Net asset value per share $ 12.94 $ 13.47 OFS Capital Corporation and Subsidiaries Consolidated Statements of Operations (unaudited) (Dollar amounts in thousands, except per share data) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Investment income Interest income $ 14,101 $ 10,345 $ 27,494 $ 20,188 Dividend income 334 5 1,119 763 Fee income 91 82 196 427 Total investment income 14,526 10,432 28,809 21,378 Expenses Interest expense 5,011 3,943 9,885 7,567 Management fee 1,883 2,056 3,777 4,076 Income Incentive Fee 1,280 — 2,518 — Capital Gains Fee — (2,988 ) — (1,916 ) Professional fees 429 352 865 759 Administration fee 440 423 922 874 Other expenses 360 398 769 765 Total expenses 9,403 4,184 18,736 12,125 Net investment income 5,123 6,248 10,073 9,253 Net realized and unrealized gain (loss) on investments Net realized gain (loss), net of taxes (10,408 ) (190 ) (10,412 ) 27 Net unrealized appreciation (depreciation), net of taxes 3,321 (14,882 ) 2,200 (9,599 ) Net loss on investments (7,087 ) (15,072 ) (8,212 ) (9,572 ) Loss on extinguishment of debt — — (19 ) (144 ) Net increase (decrease) in net assets resulting from operations $ (1,964 ) $ (8,824 ) $ 1,842 $ (463 ) Net investment income per common share – basic and diluted $ 0.38 $ 0.47 $ 0.75 $ 0.69 Net increase (decrease) in net assets resulting from operations per common share – basic and diluted $ (0.15 ) $ (0.66 ) $ 0.13 $ (0.03 ) Distributions declared per common share $ 0.33 $ 0.29 $ 0.66 $ 0.57 Basic and diluted weighted average shares outstanding 13,398,078 13,425,477 13,398,078 13,423,970 ABOUT OFS CAPITAL 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 the United States, including lower-middle-market companies, targeting investments of $3 million to $20 million in companies with annual EBITDA between $5 million and $50 million. The Company offers flexible solutions through a variety of asset classes including senior secured loans, which includes first-lien, second-lien and unitranche loans, as well as subordinated loans and, to a lesser extent, warrants and other equity securities. The Company's investment activities are managed by OFS Capital Management, LLC, an investment adviser registered under the Investment Advisers Act of 1940(4), as amended, and headquartered in Chicago, Illinois, with additional offices in New York and Los Angeles. 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 Company’s balance sheet is well positioned in the current interest rate environment due to a high percentage of floating rate loans in the portfolio and a majority of liabilities that have a fixed rate of interest, when there can be no assurance that such a composition will lead to future success; 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 December 31, 2022 filed with the Securities and Exchange Commission under the section “Risk Factors,” and in “Part II, Item 1A. Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, as well as other documents that may be filed by OFS Capital from time to time with the Securities and Exchange Commission. As a result of such risks, uncertainties and factors, actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. OFS Capital is providing the information in this press release as of this date and assumes no obligations to update the information included in this press release or revise any forward-looking statements, whether as a result of new information, future events or otherwise. (4) Registration does not imply a certain level of skill or training View source version on businesswire.com: https://www.businesswire.com/news/home/20230803666404/en/