Financial Performance - The net asset value (NAV) per common share increased to $11.51 at June 30, 2024, from $11.08 at March 31, 2024, due to a net gain on investments of $0.51 per common share[120] - Total investment income decreased to $11.2 million for the quarter ended June 30, 2024, down from $14.2 million in the prior quarter, primarily due to a $2.4 million decrease in dividend income[120] - Net investment income for the three months ended June 30, 2024, was $3.4 million, compared to $5.6 million in the prior quarter[141] - For the three months ended June 30, 2024, total investment income decreased to $11.2 million from $14.2 million in the prior quarter, primarily due to a decrease in total dividend income of $2.4 million and interest income of $0.5 million[142] - For the six months ended June 30, 2024, total investment income decreased by $3.4 million compared to the same period in the prior year, mainly due to a decrease in total interest income of $5.2 million[143] - Cash from net investment income for the six months ended June 30, 2024, was $6.2 million, a decrease of $2.9 million compared to the same period in 2023[153] Debt and Financing - The total outstanding debt decreased to $249.1 million at June 30, 2024, from $258.5 million at March 31, 2024, due to repayments of $9.4 million on the BNP Facility[120] - The weighted-average debt interest costs increased to 6.5% for the quarter ended June 30, 2024, compared to 6.3% for the prior quarter[120] - The company had unused commitments of $25.0 million under the Banc of California Credit Facility and $80.9 million under the BNP Facility as of June 30, 2024[120] - The effective interest rate on the Banc of California Credit Facility was 9.25% as of June 30, 2024, with a maturity date extended to February 28, 2026[156] - The effective interest rate on the BNP Facility was 9.07% as of June 30, 2024, with $69.1 million drawn and an unused commitment of $80.9 million[158] - Approximately 50% of the company's outstanding debt matures in 2027 and beyond, with 72% carrying fixed interest rates[162] Investment Portfolio - A net gain on investments of $6.9 million was recognized for the quarter ended June 30, 2024, primarily due to net unrealized appreciation of $11.3 million[120] - The fair value of the debt investment portfolio totaled $236.9 million in 40 portfolio companies as of June 30, 2024, with approximately 85% being first lien debt investments[125] - Total Portfolio Company Investments amounted to $322.537 million at fair value as of June 30, 2024, compared to $341.242 million at the end of 2023[130] - The three largest industries by fair value in the Portfolio Company Investments were Manufacturing (29.8%), Health Care and Social Assistance (20.6%), and Wholesale Trade (12.9%), totaling approximately 63.3%[131] - The classification of debt investments by credit risk rating showed that 80.5% were rated as Average, with a fair value of $190.782 million[135] - As of June 30, 2024, approximately 100% of the loan portfolio and 59% of the total portfolio consisted of first lien and second lien loans, providing greater downside protection against adverse economic changes[130] Distributions and Shareholder Returns - The Board declared a distribution of $0.34 per share for the third quarter of 2024, payable on September 30, 2024[120] - The company is required to distribute at least 90% of its taxable income to maintain its RIC status[163] - The company did not make any repurchases of common stock during the six months ended June 30, 2024, with approximately $9.6 million remaining under the Stock Repurchase Program[160] Operational Metrics - The asset coverage ratio was 162% as of June 30, 2024, exceeding the minimum requirement of 150% under the 1940 Act[120] - Total expenses for the three months ended June 30, 2024, were $7.7 million, a decrease from $8.6 million in the prior quarter[144] - Interest expense for the three months ended June 30, 2024, decreased to $4.1 million from $4.6 million in the prior quarter, due to a reduction in average outstanding debt balances[144] - The total net increase in net assets resulting from operations for the three months ended June 30, 2024, was $10.3 million, compared to a net decrease of $9.0 million in the prior quarter[141] Cash and Liquidity - As of June 30, 2024, the company held cash and cash equivalents of $5.6 million, with an unused commitment of $25.0 million under the Banc of California Credit Facility and $80.9 million under the BNP Facility[149] - The company had $5.6 million in cash and cash equivalents and unused commitments of $25.0 million under the Banc of California Credit Facility and $80.9 million under the BNP Facility[162] Market Conditions and Risks - The company may incur significant realized losses if required to liquidate portfolio investments in a forced sale[162] - Non-performing Structured Finance Securities had an amortized cost of $3.5 million and a fair value of $1.7 million as of June 30, 2024[131] - The company recognized a realized loss of $0.7 million on the debt restructure of its first lien debt investment in GoTo Group during the six months ended June 30, 2024[134] - The company recognized a net realized loss of $2.4 million on its second lien debt investment in Astro One Acquisition Corporation[137]
OFS Capital(OFS) - 2024 Q2 - Quarterly Report