OFS Capital Corporation Announces First Quarter 2025 Financial Results
Declares Second Quarter Distribution of $0.34 Per Share
CHICAGO--(BUSINESS WIRE)--May 01, 2025--
OFS Capital Corporation (Nasdaq: OFS) ("OFS Capital," the "Company," "we, " "us," or "our") today announced its financial results for the fiscal quarter ended March 31, 2025.
FIRST QUARTER FINANCIAL HIGHLIGHTS
-- Net investment income decreased to $0.26 per common share for the quarter
ended March 31, 2025 from $0.30 per common share for the quarter ended
December 31, 2024.
-- Net loss on investments was $0.80 per common share for the quarter ended
March 31, 2025. See additional information under "Results of Operations"
below.
-- Net asset value per common share decreased from $12.85 as of December 31,
2024 to $11.97 as of March 31, 2025.
-- As of March 31, 2025, based on fair value, 90% of our loan portfolio
consisted of floating rate loans and 100% of our loan portfolio consisted
of first lien and second lien loans.
-- For the quarter ended March 31, 2025, the investment portfolio's
weighted-average performing income yield decreased to 13.4% from 13.8%
during the prior quarter, primarily due to a decrease in interest income
related to the aggregate 50 basis point reduction in the U.S. Federal
Reserve target federal funds rate effected in the fourth quarter of 2024.
-- No new loans were placed on non-accrual status during the first quarter.
OTHER RECENT EVENTS
-- On April 29, 2025, our Board of Directors declared a distribution of
$0.34 per common share for the second quarter of 2025, payable on June
30, 2025 to stockholders of record as of June 20, 2025.
SELECTED FINANCIAL HIGHLIGHTS Three Months Ended
-----------------------------------------
(Per common share) March 31, 2025 December 31, 2024
------------------ ---------------------
Net Investment Income
Net investment income $ 0.26 $ 0.30
Net Realized/Unrealized Gain
(Loss)
Net realized loss on investments,
net of taxes $ (0.19) $ (0.19)
Net unrealized appreciation
(depreciation) on investments,
net of taxes (0.61) 1.79
---------- --- ------------
Net realized/unrealized gain
(loss) $ (0.80) $ 1.60
Earnings (Loss)
Earnings (loss) $ (0.54) $ 1.90
Net Asset Value
Net asset value $ 11.97 $ 12.85
Distributions paid $ 0.34 $ 0.34
As of
-------------------------------------
(in millions) March 31, 2025 December 31, 2024
---------------- -------------------
Balance Sheet Highlights
Total investments, at fair value $ 403.1 $ 409.7
Total outstanding debt - principal 248.1 248.4
Total net assets 160.4 172.2
PORTFOLIO AND INVESTMENT ACTIVITIES
($ in millions)
Three Months Ended
-----------------------------------------
Portfolio Yields(1) March 31, 2025 December 31, 2024
------------------------------ ------------------ ---------------------
Average performing
interest-bearing investments,
at cost $ 294.8 $ 298.0
Weighted-average performing
income yield -
interest-bearing
investments(2) 13.4% 13.8%
Weighted-average realized yield
- interest-bearing
investments(3) 11.6% 11.9%
(1) 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-performing
structured finance securities.
Three Months Ended
-------------------------------------
Portfolio Purchase Activity March 31, 2025 December 31, 2024
---------------------------------- ---------------- -------------------
Investments in debt and equity
investments $ 4.6 $ 23.2
Investments in structured finance
securities 5.8 9.4
--- ----------- ---- -------------
Total investment purchases and
originations $ 10.4 $ 32.6
--- ----------- ---- -------------
As of March 31, 2025, based on fair value, our investment portfolio was comprised of the following:
-- Total investments of $403.1 million, which was equal to approximately
110% of amortized cost;
-- Debt investments of $215.9 million, of which approximately 85% and 15%
were first lien and second lien loans, respectively;
-- Equity investments of $107.7 million; and
-- Structured finance securities of $79.5 million.
During the quarter ended March 31, 2025, no new loans were placed on non-accrual status. As of March 31, 2025, our loan portfolio had non-accrual loans with an aggregate fair value of $16.9 million, or 4.2% of our total investments at fair value.
OUTSTANDING DEBT
During the three months ended March 31, 2025 and December 31, 2024, the average dollar borrowings and weighted-average effective interest rate for our debt were as follows ($ in millions):
Average Dollar Weighted-Average
Three Months Ended Borrowings Effective Interest Rate
------------------- ---------------- --------------------------
March 31, 2025 $ 248.7 6.29%
December 31, 2024 248.1 6.30
RESULTS OF OPERATIONS
(in thousands) Three Months Ended
-------------------------------------
March 31, 2025 December 31, 2024
---------------- -------------------
Total investment income $ 10,295 $ 11,648
Expenses:
Interest expense 3,858 3,937
Base management and incentive
fees 1,879 2,539
Professional, administration and
other expenses 1,093 1,096
----------- --- --------------
Total expenses 6,830 7,572
----------- --- --------------
Net investment income 3,465 4,076
----------- --- --------------
Net gain (loss) on investments (10,752) 21,399
----------- --- --------------
Net increase (decrease) in net
assets resulting from operations $ (7,287) $ 25,475
=========== === ==============
Investment Income
For the quarter ended March 31, 2025, total investment income decreased to $10.3 million from $11.6 million in the prior quarter, primarily due to decreases in interest income of $0.5 million, dividend income of $0.5 million and fee income of $0.3 million.
The decrease in interest income was primarily attributed to the impact of lower SOFR rates driven by the U.S. Federal Reserve rate cuts enacted in the fourth quarter of 2024. The $0.8 million aggregate net decrease in dividend and fee income was due to non-recurring amounts recognized in the prior quarter.
Expenses
For the quarter ended March 31, 2025, total expenses decreased by $0.7 million to $6.8 million compared to the prior quarter, primarily due to a decrease in incentive fees of $0.7 million as a result of the decrease in net investment income return on net assets in the current quarter.
Net Gain (Loss) on Investments
For the quarter ended March 31, 2025, we recognized a net loss on investments of $10.8 million due to net unrealized depreciation, net of taxes, of $8.2 million and net realized losses of $2.6 million.
For the quarter ended March 31, 2025, our net unrealized depreciation, net of taxes, of $8.2 million was primarily due to net unrealized depreciation of $7.3 million on our debt investments, of which $3.9 million related to non-accrual debt investments.
LIQUIDITY AND CAPITAL RESOURCES
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