CHICAGO--(BUSINESS WIRE)--June 10, 2025--
OFS Credit Company, Inc. (Nasdaq: OCCI) ("OFS Credit," the "Company," "we," "us" or "our"), an investment company that primarily invests in collateralized loan obligation ("CLO") equity and debt securities, today announced its financial results for the fiscal quarter ended April 30, 2025.
SECOND QUARTER HIGHLIGHTS
--
Net investment income ("NII") of $5.2 million, or $0.21 per common
share, for the fiscal quarter ended April 30, 2025. This compares to NII
of $5.2 million, or $0.23 per common share, for the fiscal quarter ended
January 31, 2025. During the fiscal quarter ended April 30, 2025, NII
remained stable while NII per common share decreased by $0.02 to $0.21
due to a decrease in our net interest spread1.
--
Core net investment income ("Core NII")2 of $9.2 million, or $0.37 per
common share, for the fiscal quarter ended April 30, 2025. This compares
to Core NII of $7.5 million, or $0.34 per common share, for the fiscal
quarter ended January 31, 2025. Core NII increased for the fiscal quarter
ended April 30, 2025, because recurring waterfall payments from CLO
equity investments increased to $13.0 million from $10.9 million in the
prior quarter, primarily attributable to an increase in issuers making
their first payments since our investment.
--
Net asset value ("NAV") per common share of $6.17 at April 30, 2025, a
decrease from NAV of $7.00 at January 31, 2025. This decrease in NAV was
primarily due to a net loss on investments of $0.71 per common share. See
additional information under "Results of Operations" below.
--
During the fiscal quarter ended April 30, 2025, the interest income
yield3 of our investment portfolio was 14.04%, based on average amortized
cost.
--
During the fiscal quarter ended April 30, 2025, we issued 2,317,132
shares of common stock through our At-the-Market offering, for net
proceeds of $16.2 million, after deducting commissions, fees and offering
costs.
OTHER RECENT EVENTS
--
As previously announced, on April 3, 2025, our board of directors (the
"Board") declared monthly cash distributions of $0.115 per common share
for each of the three months in the fiscal quarter ending July 31, 2025,
which implies an annualized cash distribution rate of 20.7% based on the
closing market price of $6.67 per common share on April 30, 2025. See
additional information under "Distributions" below.
--
On April 1, 2025, through a private placement, we issued 1,000,000
shares of our 8.00% Series G Term Preferred Stock due 2030 at a price of
$24.25 per share, raising approximately $24.3 million in net proceeds,
before offering costs.
SELECTED FINANCIAL HIGHLIGHTS
(in millions, except per share
data) At
------------------------------------
April 30, 2025 January 31, 2025
---------------- ------------------
Balance Sheet Highlights
Total investments, at fair value $ 252.2 $ 237.5
Total outstanding preferred stock -
principal 115.9 90.9
Total net assets 160.3 164.2
NAV per common share 6.17 7.00
Operating Highlights For the Fiscal Quarter Ended
----------------------------------------------
(Per common share) April 30, 2025 January 31, 2025
------------------------ --------------------
Net investment income $ 0.21 $ 0.23
Net realized gain (loss)
on investments(4) (0.04) --
Net change in unrealized
depreciation on
investments (0.67) (0.06)
--- -------------- ------------
Net earnings (loss) $ (0.50) $ 0.17
--- -------------- ------------
Reconciliation of Core
NII -- Non-GAAP(2)
Net investment income $ 0.21 $ 0.23
CLO equity adjustments 0.16 0.11
--- -------------- --- ------------
Core NII $ 0.37 $ 0.34
=== ============== === ============
(1) Net interest spread is calculated as the earned yield on the investment
portfolio less the effective interest rate incurred on outstanding preferred
stock. (2) On a supplemental basis, we disclose Core NII, which is a financial
measure calculated and presented on a basis of methodology other than in
accordance with accounting principles generally accepted in the United States
of America ("GAAP"). Core NII represents NII adjusted for differences in
applicable cash distributions received on our CLO equity and equity-related
investments that have not been optionally redeemed relative to income
recognized in accordance with GAAP. See additional information under
"Supplemental Information Regarding Core Net Investment Income" below. (3)
Interest income yield is calculated as total investment income earned on the
investment portfolio (excluding idle cash interest income) divided by the
average total investments at cost (annualized). (4) For the fiscal quarter
ended January 31, 2025, net realized gain on investments rounds to less than
$0.01 per common share.
MANAGEMENT COMMENTARY
"During our second fiscal quarter, we raised additional capital of approximately $40.4 million through the issuance of common and preferred stock," said Bilal Rashid, Chief Executive Officer. "We deployed additional capital into our investment portfolio, which as of April 30, 2025, increased our weighted-average remaining reinvestment period to 3.4 years and weighted-average effective yield to 14.07%."
PORTFOLIO AND INVESTMENT ACTIVITIES
As of April 30, 2025, the total fair value of our investment portfolio was $252.2 million, which was equal to 81.2% of amortized cost. For the quarter ended April 30, 2025, our CLO equity cash flow yield(5) was 20.04% based on amortized cost.
At
----------------------------------------
Portfolio Overview ($ in
millions) April 30, 2025 January 31, 2025
------------------------------- ------------------ --------------------
Total investments, at fair value $ 252.2 $ 237.5
Total number of issuers 85 80
Weighted-average effective
yield(6) 14.07% 13.46%
(5) Calculated as CLO equity and equity-related cash distributions received
during the quarter, excluding distributions on CLO equity investments that
have been optionally redeemed, divided by average CLO equity and
equity-related investments at amortized cost. (6) Based on amortized cost at
period end; excludes discount accretion on CLO debt investments.
For the Fiscal Quarter Ended
---------------------------------------------
Portfolio Purchases ($ in
millions) April 30, 2025 January 31, 2025
-------------------------- ----------------------- --------------------
CLO equity investments $ 39.5 $ 22.4
CLO debt investments -- 17.0
Loan accumulation facility
investments 2.2 9.4
Other CLO equity-related
investments (i.e., fee
rebates) 0.2 --
--- ------------ ---- ----------- ---
Total investments $ 41.9 $ 48.8
--- ------------ ---- ----------- ---
Weighted-average effective
yield - period end 20.96% 15.99%
At April 30, 2025
------------------------------
Portfolio Composition ($ in millions) Amortized Cost Fair Value
----------------------------------------- ---------------- ------------
CLO equity investments $ 281.6 $ 221.9
CLO debt investments 16.9 17.8
Loan accumulation facility investments 10.7 10.7
Other CLO equity-related investments
(i.e., fee rebates) 1.4 1.8
--- ----------- --------
Total investments $ 310.6 $ 252.2
--- ----------- --------
RESULTS OF OPERATIONS
Interest Income
During the fiscal quarter ended April 30, 2025, interest income increased to $10.2 million from $10.1 million during the prior quarter. The increase in interest income was primarily due to net investment deployment (purchases, net of sales and repayments) of $36.4 million, partially offset by a 0.64% decrease in the interest income yield of our investment portfolio as compared to the prior quarter.
Expenses
During the fiscal quarter ended April 30, 2025, total expenses increased by $0.2 million to $5.1 million, primarily due to an increase of $0.2 million in interest expense related to one month of expense on our 8.00% Series G Term Preferred Stock due 2030.
Net Realized and Unrealized Gain (Loss) on Investments
During the fiscal quarter ended April 30, 2025, net loss on investments of $17.8 million was primarily due to net unrealized depreciation of $16.8 million on our CLO equity investments, attributable to meaningful widening in debt spread levels coupled with a decrease in underlying collateral loan prices during the quarter.
DISTRIBUTIONS
Third Fiscal Quarter 2025 Common Stock Distributions
The following schedule applies to distributions for common stockholders of record on the close of business of each specific record date:
Cash Distribution Per
Month Record Date Payment Date Share
---------- -------------- -------------- -------------------------
May 2025 May 20, 2025 May 30, 2025 $0.115
June 2025 June 20, 2025 June 30, 2025 $0.115
July 2025 July 21, 2025 July 31, 2025 $0.115
Dividend Reinvestment Plan ("DRIP") -- DRIP Shares Issued at 95% of Market Price
Common stockholders who participate in our DRIP have the opportunity to receive a 5% discount to the market price per share of common stock at the close of regular trading on The Nasdaq Capital Market on the valuation date fixed by the Board for each distribution (i.e., the payment date).
Common stockholders that are interested in participating in our DRIP should contact their broker or financial intermediary.
Additional information about our DRIP and how to participate can be found at https://ir.ofscreditcompany.com/shareholder-services/dividend-reinvestment-plan. We make our website content available for informational purposes only. It should not be relied upon for investment purposes, nor is it incorporated by reference into this press release.
OFS Credit Company, Inc.
Statement of Assets and Liabilities
(Unaudited)
As of April 30, 2025
------------------------
Assets:
Investments, at fair value (amortized cost of
$310,569,859) $ 252,244,071
Cash and cash equivalents 23,070,925
Receivable for common stock sold 467,715
Interest receivable 1,137,268
Other assets 369,974
-----------------
Total assets 277,289,953
=================
Liabilities:
Preferred stock (net of deferred issuance costs of
$2,390,395) 113,509,605
Payable to adviser and affiliates 2,991,239
Other liabilities 486,316
-----------------
Total liabilities 116,987,160
-----------------
Net assets $ 160,302,793
=================
Net assets consist of:
Common stock, par value of $0.001 per share;
90,000,000 shares authorized and 25,966,491
shares issued and outstanding $ 25,966
Paid-in capital in excess of par 230,585,385
Total accumulated losses (70,308,558)
-----------------
Total net assets $ 160,302,793
=================
Net asset value per common share $ 6.17
OFS Credit Company, Inc.
Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
April 30, 2025 April 30, 2025
-------------------- --------------------
Investment income:
Interest income $ 10,243,605 $ 20,302,718
Operating expenses:
Interest expense 1,787,971 3,396,329
Incentive fees 1,293,103 2,580,789
Base management fees 1,219,379 2,346,048
Administration fees 300,688 683,562
Professional fees 239,825 521,117
Other expenses 230,228 451,715
--------------- -------------
Total operating expenses 5,071,194 9,979,560
--------------- -------------
Net investment income 5,172,411 10,323,158
--------------- -------------
Net realized and unrealized
gain (loss) on investments:
Net realized loss on
investments (868,661) (840,691)
Net change in unrealized
depreciation on investments (16,881,760) (18,257,792)
--------------- -------------
Net loss on investments (17,750,421) (19,098,483)
--------------- -------------
Net decrease in net assets
resulting from operations $ (12,578,010) $ (8,775,325)
=============== =============
Weighted-average common shares
outstanding 25,197,302 23,568,187
About OFS Credit Company, Inc.
OFS Credit is a non-diversified, externally managed closed-end management investment company. The Company's primary investment objective is to generate current income, with a secondary objective to generate capital appreciation, which we seek to achieve primarily through investments in CLO equity and debt securities. The Company's investment activities are managed by OFS Capital Management, LLC, an investment adviser registered under the Investment Advisers Act of 1940(7) , as amended, and headquartered in Chicago with additional offices in New York and Los Angeles.
(7) Registration does not imply a certain level of skill or training
Forward-Looking Statements
Statements in this press release regarding management's future expectations, beliefs, intentions, goals, strategies, plans or prospects, including statements relating to: the Company's results of operations, including NII, Core NII, earnings per share and net asset value and the factors that may affect such results; and other factors may constitute forward-looking statements. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as "anticipates," "expects," "intends," "plans," "will," "may, " "continue," "believes," "seeks," "estimates," "would," "could," "should," "targets," "projects," and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including those risks, uncertainties and factors referred to in documents that may be filed by OFS Credit from time to time with the Securities and Exchange Commission ("SEC"), such as interest rate and inflation rate changes, the ongoing war between Russia and Ukraine, the agenda of the new U.S. presidential administration, including the impact of tariff enactment and tax reductions, trade disputes with other countries, instability in the U.S. and international banking systems, the risk of recession or a shutdown of U.S. government services and related market volatility, on our business, our portfolio companies, our industry and the global economy. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and, as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this press release should not be regarded as a representation by us that our plans and objectives will be achieved. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this press release. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including Annual and Semi-Annual Reports on Form N-CSR and monthly portfolio investments reports filed on Form N-PORT for the third month of each of our fiscal quarters.
Supplemental Information Regarding Core Net Investment Income
We provide information relating to Core NII (a non-GAAP measure) on a supplemental basis. This measure is not provided as a substitute for GAAP NII, but in addition to it. Our non-GAAP measures may differ from similar measures by other companies, even if similar terms are used to identify such measures. Core NII represents GAAP NII adjusted for differences in applicable cash distributions received on our CLO equity and equity-related investments that have not been optionally redeemed relative to income recognized in accordance with GAAP. OFS Capital Management, LLC, our investment adviser, uses this information in its internal analysis of results and believes that this information may be informative in gauging the quality of the Company's financial performance, identifying trends in its results, and providing meaningful period-to-period comparisons.
Income from investments in the "equity" class securities of CLO vehicles, for GAAP purposes, is recorded using the effective interest method; this is based on an estimated effective yield, at current amortized cost, to the expected redemption of the security utilizing assumed cash flows, including those CLO equity investments that have not made their inaugural distribution for the relevant period end. The result is an estimated effective yield for the investment in which the respective investment's cost basis is adjusted quarterly based on the difference between the actual cash received, or distributions entitled to be received, and the income recognized via the estimated effective yield calculation. Accordingly, investment income recognized on CLO equity and equity-related securities in the GAAP statement of operations differs from the cash distributions actually received by the Company during the period (referred to below as "CLO equity adjustments"). Therefore, management believes that Core NII may provide a useful indicator of distributable operating income, as this reflects a measure of potential cash availability, net of operating expenses, that could be utilized to cover distributions to common stockholders. We note that this non-GAAP measure has no bearing on the tax character of the common stock distributions made during the period, and future distributions are not guaranteed. A portion of current and future common stock distributions may consist of a return of capital for tax purposes. The actual tax character of our earnings cannot be finally determined until our tax return is prepared after the close of our taxable year.
The following table provides a reconciliation of GAAP NII to Core NII for the fiscal quarters ended April 30, 2025 and January 31, 2025:
For the Fiscal Quarter For the Fiscal Quarter
Ended April 30, 2025 Ended January 31, 2025
-------------------------- ---------------------------
Per Common Per Common
Share Share
Amount Amount Amount Amount
------------- ----------- ------------- ------------
Net
investment
income $ 5,172,411 $ 0.21 $ 5,150,747 $ 0.23
CLO equity
adjustments 4,049,003 0.16 2,365,893 0.11
--------- ------- --------- --- -------
Core NII $ 9,221,414 $ 0.37 $ 7,516,640 $ 0.34
========= ======= ========= === =======
The following table provides a reconciliation of GAAP NII to Core NII for the six months ended April 30, 2025 and 2024:
For the Six Months Ended For the Six Months Ended
April 30, 2025 April 30, 2024
-------------------------- ---------------------------
Per Common Per Common
Share Share
Amount Amount Amount Amount
-------------- ---------- -------------- -----------
Net
investment
income $ 10,323,158 $ 0.44 $ 9,093,433 $ 0.57
CLO equity
adjustments 6,414,896 0.27 6,564,403 0.41
---------- ------ ---------- --- ------
Core NII $ 16,738,054 $ 0.71 $ 15,657,836 $ 0.98
========== ====== ========== === ======
OFS$(R)$ and OFS Credit(R) are registered trademarks of Orchard First Source Asset Management, LLC.
OFS Capital Management$(TM)$ is a trademark of Orchard First Source Asset Management, LLC.
View source version on businesswire.com: https://www.businesswire.com/news/home/20250610127953/en/
CONTACT: INVESTOR RELATIONS:
OFS Credit Company, Inc.
Steve Altebrando
847-734-2085
investorrelations@ofscreditcompany.com
(END) Dow Jones Newswires
June 10, 2025 08:00 ET (12:00 GMT)
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