Financial Data and Key Metrics Changes - The company reported net investment income of $3.5 million or $0.26 per share for the first quarter, down from $0.30 per share in the prior quarter [4][11] - The net asset value per share decreased to $11.97 from $12.85 in the previous quarter, representing a decline of approximately 7% or $0.88 [4][12] - Total investment income decreased by approximately 12% to $10.3 million this quarter, primarily due to lower nonrecurring dividend and fee income [12][13] Business Line Data and Key Metrics Changes - The company is focused on rotating non-interest earning equity positions into interest-earning assets to improve net investment income in the long term [5] - The loan portfolio remains stable with no new non-accrual loans during the quarter, and 85% of loan holdings are in first lien positions [12][14] Market Data and Key Metrics Changes - The overall economic outlook remains uncertain, with potential impacts from global tariffs and a possible slowdown in economic activity [6][17] - The company noted that M&A activity has been quiet in 2025, more than expected, due to macroeconomic uncertainty [9] Company Strategy and Development Direction - The company aims to increase net investment income over the long term by exploring the sale of non-interest earning equity positions and redeploying proceeds into interest-earning assets [17] - The company is committed to capital preservation during uncertain economic times and focuses on investing higher in the capital structure [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the potential negative impact of macroeconomic uncertainty on the economy but believes the portfolio is generally stable [17] - The company is proactively exploring refinancing options for debt facilities with upcoming maturities [12] Other Important Information - Approximately 73% of the company's outstanding debt is unsecured, providing additional liquidity and flexibility [9][12] - The adviser managing the company has a track record of over 25 years through multiple credit cycles and manages approximately $4.1 billion across loan and structured credit markets [10][18] Q&A Session Summary - There were no questions during the Q&A session, and the conference call concluded without any inquiries [21]

Financial Data and Key Metrics Changes - The company reported net investment income of $0.26 per share for the first quarter, down from $0.30 per share in the prior quarter [4][11] - Net asset value decreased to $11.97 per share from $12.85 per share in the previous quarter, primarily due to company-specific marks and broader credit market declines [4][12] - Total investment income decreased approximately 12% to $10.3 million, driven by lower nonrecurring dividend and fee income and reduced interest income from the loan portfolio [12][13] Business Line Data and Key Metrics Changes - The loan portfolio remains stable with no new non-accrual loans during the quarter, and 85% of loan holdings are in first lien positions [12][14] - The weighted average performing investment income yield declined to 13.4%, down about 0.4% quarter over quarter, primarily due to last year's interest rate cuts [15] Market Data and Key Metrics Changes - The overall economic outlook is uncertain, with potential impacts from global tariffs and a possible slowdown in economic activity, which could affect portfolio companies' earnings [6][17] - The company noted that M&A activity has been quiet in 2025, more than expected, due to macroeconomic uncertainty [9] Company Strategy and Development Direction - The company is focused on rotating non-interest earning equity positions into interest-earning assets to improve long-term net investment income [5][17] - There is a commitment to capital preservation during uncertain economic times, with a focus on investing higher in the capital structure [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed that the current macroeconomic uncertainty may negatively impact the economy, but the portfolio is generally stable and defensively positioned [17][18] - The company plans to maintain its quarterly distribution at $0.34 per share while evaluating the macroeconomic environment [11] Other Important Information - Approximately 73% of outstanding debt is unsecured, providing additional liquidity and flexibility [9][12] - The adviser manages approximately $4.1 billion across loan and structured credit markets, with a strong track record through multiple credit cycles [10][18] Q&A Session Summary - There were no questions during the Q&A session, and the conference concluded without any inquiries [21]

Financial Data and Key Metrics Changes - The company reported net investment income of $3,500,000 or $0.26 per share for the first quarter, down from $0.30 per share in the prior quarter, primarily due to a decrease in nonrecurring dividend and fee income [4][11] - The net asset value per share decreased to $11.97 from $12.85, representing a decline of approximately 7% or $0.88, mainly due to net unrealized depreciation on the investment portfolio [4][12] - Total investment income decreased by approximately 12% to $10,300,000, driven by lower interest income on the loan portfolio and the absence of nonrecurring income [12][13] Business Line Data and Key Metrics Changes - The loan portfolio remains stable with no new non-accrual loans during the quarter, and 85% of loan holdings are in first lien positions [12][14] - The weighted average performing investment income yield declined to 13.4%, down about 0.4% quarter over quarter, primarily due to last year's interest rate cuts [15] Market Data and Key Metrics Changes - The overall economic outlook is uncertain, with potential impacts from global tariffs and a possible slowdown in economic activity, which could affect portfolio companies' earnings [6][17] - M&A activity has been quiet, more than expected, due to macroeconomic uncertainty dampening prospects for increased activity [9] Company Strategy and Development Direction - The company is focused on rotating non-interest earning equity positions into interest-earning assets to improve long-term net investment income [5][18] - The strategy includes maintaining a diversified portfolio across multiple industries and investing higher in the capital structure [7][17] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the macroeconomic environment's impact on the economy but believes the portfolio is generally stable and defensively positioned [17][19] - The company is committed to capital preservation during uncertain economic times and has a long-standing experience that has served it well [19][20] Other Important Information - The company maintains a quarterly distribution of $0.34 per share, representing a 14.6% annualized yield based on the market price of its common stock [11] - Approximately 73% of outstanding debt is unsecured, providing additional liquidity and flexibility [8][12] Q&A Session Summary - There were no questions during the Q&A session, and the conference concluded without any inquiries [22]

[PART I. FINANCIAL INFORMATION](index=9&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Consolidated Financial Statements](index=9&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) The company's net assets and NAV per share declined in Q1 2025 due to a net operating loss, with the investment portfolio remaining diversified [Consolidated Statements of Assets and Liabilities](index=9&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) Total assets and net assets decreased during the quarter, resulting in a lower net asset value per share Consolidated Statements of Assets and Liabilities (in thousands, except per share data) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total investments, at fair value | $403,071 | $409,665 | | Total assets | $411,963 | $428,123 | | Total liabilities | $251,580 | $255,898 | | Total net assets | $160,383 | $172,225 | | Net asset value per share | $11.97 | $12.85 | [Consolidated Statements of Operations](index=10&type=section&id=Consolidated%20Statements%20of%20Operations) Quarterly investment income and net investment income decreased year-over-year, leading to a net loss from operations Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total investment income | $10,295 | $14,233 | | Total expenses | $6,830 | $8,637 | | Net investment income | $3,465 | $5,596 | | Net loss on investments | $(10,752) | $(14,645) | | Net decrease in net assets from operations | $(7,287) | $(9,049) | | Net investment income per share | $0.26 | $0.42 | | Net decrease in net assets per share | $(0.54) | $(0.67) | | Distributions declared per share | $0.34 | $0.34 | [Consolidated Statements of Changes in Net Assets](index=11&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) Net assets decreased by $11.8 million in Q1 2025, driven by a net operating loss and shareholder distributions - Net assets decreased from **$172,225 thousand** at the end of 2024 to **$160,383 thousand** at March 31, 2025[16](index=16&type=chunk) Changes in Net Assets for Q1 2025 (in thousands) | Description | Amount | | :--- | :--- | | Net investment income | $3,465 | | Net realized loss on investments | $(2,587) | | Net unrealized depreciation on investments | $(8,165) | | Distributions declared | $(4,555) | | **Net decrease for the period** | **$(11,842)** | [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased significantly year-over-year, while financing activities primarily involved shareholder distributions Consolidated Cash Flows (in thousands) | Cash Flow Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,841 | $9,218 | | Net cash used in financing activities | $(4,855) | $(48,475) | | **Net decrease in cash and cash equivalents** | **$(2,014)** | **$(39,257)** | [Consolidated Schedules of Investments](index=13&type=section&id=Consolidated%20Schedules%20of%20Investments) The investment portfolio's fair value slightly decreased to $403.1 million, with a significant concentration in Pfanstiehl Holdings, Inc Portfolio Composition by Fair Value | Investment Type | Fair Value (Mar 31, 2025) | % of Total | Fair Value (Dec 31, 2024) | % of Total | | :--- | :--- | :--- | :--- | :--- | | First lien debt | $184,315 | 45.8% | $189,874 | 46.3% | | Second lien debt | $31,547 | 7.8% | $34,331 | 8.4% | | Preferred equity | $10,615 | 2.6% | $12,248 | 3.0% | | Common equity, warrants & other | $97,060 | 24.1% | $96,337 | 23.5% | | Structured Finance Securities | $79,534 | 19.7% | $76,875 | 18.8% | | **Total Investments** | **$403,071** | **100.0%** | **$409,665** | **100.0%** | - The company's equity investment in Pfanstiehl Holdings, Inc had a fair value of $90.8 million, representing **56.6% of total net assets** as of March 31, 2025[26](index=26&type=chunk)[78](index=78&type=chunk) - As of March 31, 2025, investments on non-accrual status had an aggregate amortized cost of **$39.1 million** and a fair value of **$16.9 million**[26](index=26&type=chunk)[77](index=77&type=chunk) [Notes to Consolidated Financial Statements (unaudited)](index=31&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(unaudited)) The notes detail the company's BDC structure, related-party transactions, portfolio valuation, and debt facilities with upcoming maturities - The company is an externally managed BDC and has elected to be treated as a RIC for tax purposes[45](index=45&type=chunk) - OFS Advisor manages operations and receives a base management fee of **1.75%** of average total assets and a two-part incentive fee[58](index=58&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) - As of March 31, 2025, affiliates of OFS Advisor held approximately **22.6%** of the Company's outstanding common stock[70](index=70&type=chunk) - As of March 31, 2025, the company had **$13.8 million in unfunded commitments** to nine portfolio companies[99](index=99&type=chunk) - On March 1, 2024, the company's subsidiary, SBIC I LP, fully repaid its outstanding SBA debentures totaling **$31.9 million** and surrendered its SBIC license[49](index=49&type=chunk)[103](index=103&type=chunk) - The Board declared a second quarter 2025 distribution of **$0.34 per share**, payable on June 30, 2025[129](index=129&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the decline in NAV per share, lower investment income, and key liquidity considerations for 2025 and 2026 Key Performance Metrics Per Share | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net asset value | $11.97 | $12.85 | | Net investment income (for the quarter) | $0.26 | $0.30 | | Net (decrease) in net assets (for the quarter) | $(0.54) | $1.90 | | Distributions paid (for the quarter) | $0.34 | $0.34 | - The decrease in NAV per share was attributed to a **net loss on investments of $0.80 per share** and a quarterly distribution exceeding net investment income[131](index=131&type=chunk) - The company's **asset coverage ratio was 165%** as of March 31, 2025, exceeding the minimum requirement of 150%[135](index=135&type=chunk)[183](index=183&type=chunk) - The reinvestment period for the BNP Facility ends in June 2025, posing a **significant short-term liquidity risk** if not extended or replaced[181](index=181&type=chunk)[206](index=206&type=chunk) [Portfolio Composition and Investment Activity](index=55&type=section&id=Portfolio%20Composition%20and%20Investment%20Activity) The portfolio's fair value was $403.1 million, with high concentration in the top ten investments and a decrease in performing income yield Ten Largest Investments by Fair Value (as of March 31, 2025, in thousands) | Issuer Name | Type | Fair Value | % of Total Portfolio | % of Net Assets | | :--- | :--- | :--- | :--- | :--- | | Pfanstiehl Holdings, Inc. | Equity | $90,762 | 22.5% | 56.6% | | Kreg LLC | Debt | $17,431 | 4.3% | 10.9% | | Inergex Holdings, LLC | Debt | $17,086 | 4.2% | 10.7% | | SS Acquisition, LLC | Debt | $16,641 | 4.1% | 10.4% | | Tolemar Acquisition, Inc. | Debt | $15,320 | 3.8% | 9.6% | | Honor HN Buyer Inc. | Debt | $15,008 | 3.7% | 9.4% | | One GI LLC | Debt | $12,244 | 3.0% | 7.6% | | Boca Home Care Holdings, Inc. | Debt and Equity | $10,432 | 2.6% | 6.5% | | Contract Datascan Holdings, Inc. | Equity | $10,255 | 2.5% | 6.4% | | ICG US CLO 2021-3, Ltd. | Structured Finance | $9,893 | 2.5% | 6.2% | Portfolio Yields | Weighted-Average Performing Income Yield | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Debt investments | 12.3% | 12.9% | | Structured Finance Securities | 16.3% | 16.3% | | **Interest-bearing investments** | **13.4%** | **13.8%** | - As of March 31, 2025, debt investments on non-accrual status had a fair value of **$16.9 million**, representing 4.2% of total investments at fair value[134](index=134&type=chunk)[163](index=163&type=chunk) [Results of Operations](index=59&type=section&id=Results%20of%20Operations) Investment income and expenses both decreased from Q4 2024, while a net loss on investments reversed the prior quarter's gain Quarterly Operating Results Comparison (in thousands) | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Total investment income | $10,295 | $11,648 | $14,233 | | Total expenses | $6,830 | $7,572 | $8,637 | | Net investment income | $3,465 | $4,076 | $5,596 | | Net gain (loss) on investments | $(10,752) | $21,399 | $(14,645) | - The Q1 2025 net loss on investments of **$10.8 million** was primarily due to a net loss of $8.1 million on debt investments[177](index=177&type=chunk)[178](index=178&type=chunk) - The Q4 2024 net gain on investments of **$21.4 million** was primarily driven by net unrealized appreciation on the Pfanstiehl Holdings, Inc investment[179](index=179&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=Liquidity%20and%20Capital%20Resources) The company has adequate near-term liquidity but faces significant debt maturities and facility expirations in 2025 and 2026 Sources and Uses of Cash (in thousands) | Description | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,841 | $9,218 | | Net cash used in financing activities | $(4,855) | $(48,475) | | **Net decrease in cash** | **$(2,014)** | **$(39,257)** | - The company has **$125.0 million of Unsecured Notes** and the Banc of California Facility maturing in February 2026[188](index=188&type=chunk)[190](index=190&type=chunk) - The Board extended the Stock Repurchase Program to May 2026, with **$9.6 million remaining** available for repurchases[202](index=202&type=chunk)[232](index=232&type=chunk) - On June 26, 2024, stockholders authorized the company to **sell shares below NAV**, though no shares have been sold under this authorization[203](index=203&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=67&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to significant investment valuation uncertainty and interest rate risk affecting its floating-rate assets - The company faces **investment valuation risk** due to the use of unobservable inputs (Level 3) for most of its investments[217](index=217&type=chunk) - As of March 31, 2025, **$207.0 million** of the company's investments at fair value were floating-rate, making income sensitive to rate changes[218](index=218&type=chunk) Annualized Impact of Hypothetical Interest Rate Changes (in thousands) | Basis Point Change | Impact on Interest Income | Impact on Interest Expense | Net Change | | :--- | :--- | :--- | :--- | | +100 | $2,159 | $(664) | $1,495 | | -100 | $(2,204) | $697 | $(1,507) | [Controls and Procedures](index=68&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The CEO and CFO concluded that as of March 31, 2025, the company's **disclosure controls and procedures were effective** at the reasonable assurance level[224](index=224&type=chunk) - **No material changes** in internal control over financial reporting occurred during the quarter ended March 31, 2025[225](index=225&type=chunk) [PART II. OTHER INFORMATION](index=69&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=69&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently subject to any material pending legal proceedings that would adversely affect its financial condition - The company is **not currently subject to any material pending legal proceedings** as of March 31, 2025[227](index=227&type=chunk) [Risk Factors](index=69&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - There have been **no material changes** to the risk factors disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024[229](index=229&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=69&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity was sold, and no shares were repurchased under the extended stock repurchase program during the quarter - The Board extended the **Stock Repurchase Program** for a two-year period ending May 22, 2026[232](index=232&type=chunk) - **No shares of common stock were repurchased** under the program during the three months ended March 31, 2025[123](index=123&type=chunk)[233](index=233&type=chunk) - As of March 31, 2025, approximately **$9.6 million remained available** for purchase under the Stock Repurchase Program[232](index=232&type=chunk) [Defaults Upon Senior Securities](index=69&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not applicable - Not applicable[234](index=234&type=chunk) [Mine Safety Disclosures](index=69&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Not applicable[235](index=235&type=chunk) [Other Information](index=70&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted new trading plans, and the company's stock traded at a significant discount to NAV during the quarter - No director or officer of the Company adopted or terminated a **Rule 10b5-1 trading arrangement** during the three months ended March 31, 2025[236](index=236&type=chunk) Q1 2025 Stock Performance | Metric | Value | | :--- | :--- | | NAV Per Share (end of Q1) | $11.97 | | High Sales Price | $9.80 | | Low Sales Price | $7.92 | | Premium (Discount) of High Price to NAV | -18.1% | | Premium (Discount) of Low Price to NAV | -33.8% | | Cash Distribution per Share | $0.34 | [Exhibits](index=71&type=section&id=Item%206.%20Exhibits) This section lists standard exhibits filed with the report, including Sarbanes-Oxley certifications and Inline XBRL data - The report includes standard exhibits, such as **CEO and CFO certifications** under Sarbanes-Oxley and Inline XBRL filings[239](index=239&type=chunk) [Signatures](index=72&type=section&id=SIGNATURES) - The report was signed on May 1, 2025, by **Bilal Rashid, Chief Executive Officer, and Kyle Spina, Chief Financial Officer**[242](index=242&type=chunk)

[Financial Highlights and Recent Events](index=1&type=section&id=OFS%20CAPITAL%20CORPORATION%20ANNOUNCES%20FIRST%20QUARTER%202025%20FINANCIAL%20RESULTS) OFS Capital reported a net investment income of $0.26 per share and a net loss of $0.54 per share for Q1 2025, with NAV decreasing to $11.97 per share [First Quarter 2025 Financial Highlights](index=1&type=section&id=FIRST%20QUARTER%20FINANCIAL%20HIGHLIGHTS) OFS Capital reported a net investment income of $0.26 per share and a net loss of $0.54 per share for the first quarter of 2025, with net asset value (NAV) per common share decreasing to $11.97 from $12.85 in the previous quarter, and total investments at fair value standing at $403.1 million, while announcing a second-quarter distribution of $0.34 per share | (Per common share) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net investment income | $0.26 | $0.30 | | Earnings (loss) | $(0.54) | $1.90 | | Net asset value | $11.97 | $12.85 | | Distributions paid | $0.34 | $0.34 | | **(in millions)** | **As of March 31, 2025** | **As of December 31, 2024** | | Total investments, at fair value | $403.1 | $409.7 | | Total outstanding debt - principal | $248.1 | $248.4 | | Total net assets | $160.4 | $172.2 | - The Board of Directors declared a distribution of **$0.34 per common share** for the second quarter of 2025, payable on June 30, 2025[3](index=3&type=chunk) - Net investment income decreased to **$0.26 per common share** for Q1 2025 from **$0.30** in Q4 2024[5](index=5&type=chunk) - The investment portfolio's weighted-average performing income yield decreased to **13.4%** from **13.8%** in the prior quarter, primarily due to the reduction in the U.S. Federal Reserve target federal funds rate[5](index=5&type=chunk) [Portfolio and Investment Activities](index=2&type=section&id=PORTFOLIO%20AND%20INVESTMENT%20ACTIVITIES) As of March 31, 2025, the investment portfolio was valued at $403.1 million, with debt investments comprising $215.9 million, a weighted-average performing income yield of 13.4%, and investment purchases totaling $10.4 million, while non-accrual loans constituted 4.2% of the total portfolio at fair value with no new additions [Portfolio Composition](index=2&type=section&id=Portfolio%20Composition) As of March 31, 2025, the investment portfolio's fair value was $403.1 million, with debt investments accounting for $215.9 million (85% first lien), and equity investments and structured finance securities valued at $107.7 million and $79.5 million, respectively - As of March 31, 2025, based on fair value, the investment portfolio was comprised of: Debt investments: **$215.9 million** (85% first lien, 15% second lien); Equity investments: **$107.7 million**; Structured finance securities: **$79.5 million**[11](index=11&type=chunk) - As of March 31, 2025, **90%** of the loan portfolio consisted of floating rate loans, and **100%** consisted of first lien and second lien loans[5](index=5&type=chunk) [Portfolio Yields and Activity](index=2&type=section&id=Portfolio%20Yields%20and%20Activity) The weighted-average performing income yield on interest-bearing investments decreased to 13.4% in Q1 2025 from 13.8% in Q4 2024, with total investment purchases and originations dropping significantly to $10.4 million from $32.6 million in the prior quarter, and no new loans placed on non-accrual status Portfolio Yields | Portfolio Yields | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Weighted-average performing income yield | 13.4% | 13.8% | | Weighted-average realized yield | 11.6% | 11.9% | Portfolio Purchase Activity (in millions) | Portfolio Purchase Activity (in millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total investment purchases and originations | $10.4 | $32.6 | - No new loans were placed on non-accrual status during the first quarter, with non-accrual loans having an aggregate fair value of **$16.9 million**, or **4.2%** of total investments at fair value, as of March 31, 2025[8](index=8&type=chunk) [Results of Operations](index=2&type=section&id=RESULTS%20OF%20OPERATIONS) For Q1 2025, OFS Capital reported a net decrease in net assets of $7.3 million, a significant downturn from a $25.5 million increase in Q4 2024, driven by a $1.3 million decrease in total investment income to $10.3 million and a net loss on investments of $10.8 million, while total expenses fell by $0.7 million to $6.8 million primarily due to lower incentive fees [Summary of Operations](index=2&type=section&id=Summary%20of%20Operations) The company's net investment income for Q1 2025 was $3.5 million, down from $4.1 million in the previous quarter, and a substantial net loss on investments of $10.8 million, compared to a $21.4 million gain in Q4 2024, led to a net decrease in net assets from operations of $7.3 million | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended December 31, 2024 | | :--- | :--- | :--- | | Total investment income | $10.3 | $11.6 | | Total expenses | $6.8 | $7.6 | | Net investment income | $3.5 | $4.1 | | Net gain (loss) on investments | $(10.8) | $21.4 | | Net increase (decrease) in net assets | $(7.3) | $25.5 | [Investment Income](index=4&type=section&id=Investment%20Income) Total investment income for Q1 2025 decreased to $10.3 million from $11.6 million in the prior quarter, primarily caused by a $0.5 million drop in interest income due to lower SOFR rates, and a combined $0.8 million decrease in dividend and fee income from non-recurring amounts in the previous quarter - Total investment income decreased to **$10.3 million** from **$11.6 million** in the prior quarter, driven by decreases in interest income (**$0.5 million**), dividend income (**$0.5 million**), and fee income (**$0.3 million**)[12](index=12&type=chunk) - The decrease in interest income was mainly due to lower SOFR rates from Federal Reserve rate cuts, while the drop in dividend and fee income was due to non-recurring amounts in Q4 2024[13](index=13&type=chunk) [Expenses](index=4&type=section&id=Expenses) Total expenses for Q1 2025 were $6.8 million, a decrease of $0.7 million from the prior quarter, with the reduction almost entirely attributable to a $0.7 million decrease in incentive fees, which was a result of lower net investment income - Total expenses decreased by **$0.7 million** to **$6.8 million**, primarily due to a **$0.7 million** decrease in incentive fees resulting from lower net investment income return on net assets[14](index=14&type=chunk) [Net Gain (Loss) on Investments](index=4&type=section&id=Net%20Gain%20(Loss)%20on%20Investments) In Q1 2025, the company recognized a net loss on investments of $10.8 million, comprising $2.6 million in net realized losses and $8.2 million in net unrealized depreciation, with the latter driven mainly by a $7.3 million depreciation on debt investments, including $3.9 million related to non-accrual loans - A net loss on investments of **$10.8 million** was recognized, consisting of **$8.2 million** in net unrealized depreciation and **$2.6 million** in net realized losses[15](index=15&type=chunk) - The net unrealized depreciation was primarily due to a **$7.3 million** markdown on debt investments, of which **$3.9 million** was related to non-accrual debt investments[15](index=15&type=chunk) [Liquidity, Capital Resources, and Debt](index=2&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) As of March 31, 2025, OFS Capital had $4.1 million in cash and access to $107 million in unused credit facilities, with average borrowings for the quarter at $248.7 million at a stable interest rate of 6.29%, and $13.8 million in unfunded commitments to portfolio companies [Outstanding Debt](index=2&type=section&id=OUTSTANDING%20DEBT) During Q1 2025, average borrowings were $248.7 million with a weighted-average effective interest rate of 6.29%, figures that remained relatively stable compared to the $248.1 million in borrowings and 6.30% interest rate in Q4 2024 | Three Months Ended | Average Dollar Borrowings (in millions) | Weighted-Average Effective Interest Rate | | :--- | :--- | :--- | | March 31, 2025 | $248.7 | 6.29% | | December 31, 2024 | $248.1 | 6.30% | [Liquidity and Capital Resources](index=4&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES_sub) As of March 31, 2025, the company held $4.1 million in cash and cash equivalents, with significant available liquidity including $21.5 million unused under its Banc of California facility and $85.5 million unused under its BNP Paribas facility, subject to covenants, and unfunded commitments to portfolio companies totaling $13.8 million - As of March 31, 2025, the company had **$4.1 million** in cash and cash equivalents[16](index=16&type=chunk) - The company had a total of **$107 million** in unused commitments under its revolving credit facilities (**$21.5 million** with Banc of California and **$85.5 million** with BNP Paribas)[17](index=17&type=chunk) - Outstanding commitments to fund various undrawn revolvers and other credit facilities of portfolio companies totaled **$13.8 million**[17](index=17&type=chunk) [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show a decrease in net assets to $160.4 million and a net loss of $7.3 million for Q1 2025, driven by investment losses [Consolidated Statements of Assets and Liabilities](index=5&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities%20(Unaudited)) As of March 31, 2025, OFS Capital's total assets were $412.0 million and total liabilities were $251.6 million, resulting in total net assets of $160.4 million, reflecting a decrease from $172.2 million at the end of 2024, with net asset value per share declining to $11.97 from $12.85 | (in millions, except per share data) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total investments, at fair value | $403.1 | $409.7 | | Total assets | $412.0 | $428.1 | | Total liabilities | $251.6 | $255.9 | | Total net assets | $160.4 | $172.2 | | Net asset value per share | $11.97 | $12.85 | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations%20(Unaudited)) For the first quarter of 2025, OFS Capital generated $10.3 million in total investment income and incurred $6.8 million in expenses, resulting in a net investment income of $3.5 million ($0.26 per share), while a significant net loss on investments of $10.8 million led to a net decrease in net assets from operations of $7.3 million, or ($0.54) per share | (in millions, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended December 31, 2024 | | :--- | :--- | :--- | | Total investment income | $10.3 | $11.6 | | Total expenses | $6.8 | $7.6 | | Net investment income | $3.5 | $4.1 | | Net gain (loss) on investments | $(10.8) | $21.4 | | Net increase (decrease) in net assets | $(7.3) | $25.5 | | Net investment income per common share | $0.26 | $0.30 | | Net increase (decrease) in net assets per share | $(0.54) | $1.90 | [Company Information and Disclosures](index=4&type=section&id=Company%20Information%20and%20Disclosures) This section provides an overview of OFS Capital's business model, details for the Q1 2025 earnings conference call, and a standard forward-looking statements disclaimer [About OFS Capital](index=7&type=section&id=ABOUT%20OFS%20CAPITAL) OFS Capital is an externally managed business development company (BDC) focused on providing current income and capital appreciation, primarily investing in debt and, to a lesser extent, equity of privately held U.S. middle-market companies, typically with annual EBITDA between $5 million and $50 million, with investment activities managed by OFS Capital Management, LLC - OFS Capital is an externally managed, closed-end, non-diversified management investment company regulated as a business development company (BDC)[22](index=22&type=chunk) - The company's investment objective is to provide stockholders with current income and capital appreciation through debt and equity investments in U.S. middle-market companies with annual EBITDA between **$5 million** and **$50 million**[22](index=22&type=chunk) [Conference Call Information](index=4&type=section&id=CONFERENCE%20CALL) OFS Capital will host a conference call to discuss its Q1 2025 financial results on Friday, May 2, 2025, at 10:00 AM Eastern Time, with details provided for participation via internet webcast and telephone - A conference call to discuss results is scheduled for Friday, May 2, 2025, at **10:00 AM Eastern Time**[18](index=18&type=chunk) - Participation is available via internet at www.ofscapital.com or by telephone at **(833) 816-1364 (Domestic)** or **(412) 317-5699 (International)**[18](index=18&type=chunk)[19](index=19&type=chunk) [Forward-Looking Statements](index=7&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section serves as a legal disclaimer, cautioning that statements in the press release about future expectations are forward-looking and subject to various risks and uncertainties, noting that actual results may differ materially and directing readers to the company's SEC filings for more information on these risks, with OFS Capital undertaking no obligation to update these statements - The press release contains forward-looking statements that involve known and unknown risks and uncertainties, which may cause actual results to differ materially from expectations[23](index=23&type=chunk) - The company assumes no obligation to update the information or revise any forward-looking statements[23](index=23&type=chunk)

Core Viewpoint - The article emphasizes the importance of value investing and highlights OFS Capital as a strong candidate for value investors due to its attractive financial metrics and strong earnings outlook [2][4][7] Group 1: Investment Strategy - Value investing is a popular strategy that focuses on identifying undervalued companies using fundamental analysis [2] - The Zacks Rank and Style Scores system are tools that can help investors find high-quality value stocks [3] Group 2: OFS Capital Financial Metrics - OFS Capital has a Zacks Rank of 2 (Buy) and an A for Value, indicating strong potential [4] - The Forward P/E ratio of OFS is 8.64, which is lower than the industry average of 9.47, suggesting it may be undervalued [4] - OFS's P/B ratio is 0.69, compared to the industry average of 0.97, indicating an attractive valuation [5] - The P/CF ratio for OFS is 6.02, significantly lower than the industry average of 8.88, further supporting its undervaluation [6] - These financial metrics collectively suggest that OFS Capital is likely being undervalued at the moment [7]

Group 1 - OFS Credit Company Inc (NASDAQ: OCCI) operates as a closed-end fund focused on generating high income from its portfolio of CLO investments [1] - CLOs (Collateralized Loan Obligations) consist of various pools of loans, which are the primary investment vehicle for the company [1] - The company aims to create a hybrid investment strategy that combines growth and income, achieving total returns comparable to traditional index funds like the S&P [1] Group 2 - The article emphasizes the importance of diversifying investments by including high-quality dividend stocks, Business Development Companies, REITs, and Closed End Funds to enhance investment income [1] - The author has over 15 years of experience in investing and specializes in identifying lucrative market opportunities [1]

Core Insights - The article emphasizes the importance of a hybrid investment strategy that combines high-quality dividend stocks with other investment vehicles such as Business Development Companies, REITs, and Closed End Funds to enhance income while achieving total returns comparable to traditional index funds [1]. Investment Strategy - The investment approach focuses on creating a balanced portfolio that not only provides income through dividends but also captures growth, aiming for a total return that aligns with the S&P 500 [1]. - The strategy suggests that a solid base of classic dividend growth stocks can be effectively supplemented with alternative assets to boost overall investment income [1].

OFS Capital (OFS) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #2 (Buy). This upgrade primarily reflects an upward trend in earnings estimates, which is one of the most powerful forces impacting stock prices.A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.The power of a changing ...

Financial Data and Key Metrics Changes - Net investment income increased by approximately 13% to $0.30 per share for Q4 2024 [6][14] - Net asset value per share increased by 14% to $12.85 per share [6][16] - Total investment income rose almost 7% to $11.6 million [19] - Total expenses increased by 3.5% to $7.6 million [20] Business Line Data and Key Metrics Changes - Significant increase in dividend income attributed to a nonrecurring distribution and other nonrecurring fee income [7][14] - No new non-accruals this quarter, with one loan exiting non-accrual status [9][17] - The loan portfolio remains well-diversified, with 100% in first lien and second lien senior secured loans [10][22] Market Data and Key Metrics Changes - The regulatory asset coverage ratio increased by eight percentage points to 169% [18] - Approximately 72% of outstanding debt was unsecured at quarter end [11][19] Company Strategy and Development Direction - The company is focused on rotating non-interest earning equity positions into interest-earning assets to improve net investment income [7][24] - Continued exploration of monetizing the minority equity investment in Fansteel Holdings [7][16] - Emphasis on capital preservation during uncertain economic times [24][25] Management's Comments on Operating Environment and Future Outlook - The Fed rate cuts in the second half of 2024 positively impacted portfolio companies by reducing interest costs [11] - Confidence in the adviser's experience and expertise in navigating the current market environment [13][25] - The company believes it is well-positioned to navigate the market successfully due to its adviser's size and reputation [25][26] Other Important Information - The company has $18.8 million in unfunded commitments to portfolio companies [22] - The investment portfolio comprised approximately 69% senior secured loans, 25% structured finance securities, and 6% equity securities [22] Q&A Session Summary - The Q&A session was not detailed in the provided content, and thus no specific questions and answers can be summarized. [27]