OFS Capital(US:OFS)2024-10-31 21:32Financial Performance - Net asset value per common share decreased to $11.29 as of September 30, 2024, from $11.51 at June 30, 2024, due to a net loss on investments of $0.15 per share and a quarterly distribution of $0.34 per share exceeding net investment income of $0.27 per share [132]. - Total investment income for the quarter ended September 30, 2024, decreased to $10.9 million from $11.2 million in the prior quarter, primarily due to a $0.2 million decrease in interest income [132]. - The company recognized a net loss on investments of $1.9 million for the quarter ended September 30, 2024, primarily due to net realized losses of $11.1 million [132]. - Net investment income for the three months ended September 30, 2024 was $3.603 million, compared to $3.437 million in the prior quarter [158]. - The net loss on investments for the three months ended September 30, 2024 was $1.915 million, primarily due to aggregate net losses of $5.6 million on loans and Structured Finance Securities [164]. - For the nine months ended September 30, 2024, total investment income decreased by $7.1 million compared to the corresponding period in the prior year, primarily due to a decrease in total interest income of $8.9 million [161]. - The company recognized a net loss on investments of $9.7 million for the nine months ended September 30, 2024, primarily due to a net loss on debt investments of $8.7 million [164]. Debt and Financing - As of September 30, 2024, total outstanding debt was $249.1 million, with a weighted-average debt interest cost of 6.46% [132]. - The aggregate amount outstanding of the senior securities issued by the company was $249.1 million, with an asset coverage ratio of 161%, exceeding the minimum requirement of 150% under the 1940 Act [166]. - Approximately 50% of the company's outstanding debt matures in 2027 and beyond, with 72% carrying fixed interest rates and being unsecured [178]. - The effective interest rate on the Banc of California Credit Facility was 8.75% as of September 30, 2024 [172]. - The effective interest rate on the BNP Facility was 8.78% as of September 30, 2024, with $69.1 million drawn and an unused commitment of $80.9 million [174]. - 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 September 30, 2024 [132]. Investment Portfolio - The fair value of the debt investment portfolio totaled $231.1 million in 42 portfolio companies, with approximately 82% being first lien debt investments [138]. - The common equity investment in Pfanstiehl Holdings, Inc. accounted for 18.7% of the total portfolio at fair value and 48.7% of total net assets as of September 30, 2024 [141]. - Total Portfolio Company Investments amounted to $320.9 million at fair value as of September 30, 2024, compared to $341.2 million as of December 31, 2023 [145]. - The three largest industries by fair value in the Portfolio Company Investments were Manufacturing (33.4%), Health Care and Social Assistance (20.5%), and Professional, Scientific, and Technical Services (8.8%), totaling approximately 62.7% [146]. - As of September 30, 2024, 100% of the loan portfolio and 59% of the total portfolio consisted of first lien and second lien loans based on fair value [145]. - The company had non-accrual loans with an aggregate fair value of $21.1 million, representing 5.4% of total investments at fair value as of September 30, 2024 [132]. Cash and Distributions - The company held cash and cash equivalents of $20.3 million, including $8.0 million held by OFSCC-FS [166]. - Cash from net investment income for the nine months ended September 30, 2024, was $8.8 million, a decrease of $3.8 million compared to $12.6 million for the same period in 2023 [170]. - Distributions paid to stockholders increased to $13.7 million for the nine months ended September 30, 2024, compared to $13.4 million in 2023 [169]. - A distribution of $0.34 per share for the fourth quarter of 2024 was declared on October 29, 2024, payable on December 31, 2024 [132]. - The company is required to distribute at least 90% of its taxable income to maintain its RIC status [179]. Operational Metrics - Total expenses for the three months ended September 30, 2024 were $7.315 million, a decrease from $7.728 million in the prior quarter [162]. - Interest expense for the nine months ended September 30, 2024 decreased by $2.1 million compared to the corresponding period in the prior year, primarily due to the full repayment of SBA debentures [162]. - The company's average total assets (excluding cash and cash equivalents) decreased, leading to a reduction in base management fees by $1.1 million for the nine months ended September 30, 2024, compared to the prior year [162]. - The company had a payable for investments purchased of $14.7 million and $8.5 million in unfunded commitments to fund portfolio investments as of September 30, 2024 [178]. Strategic Focus - The company’s investment strategy now includes a focus on debt investments in larger U.S. companies and Structured Finance Securities, differing from its historical investment concentration [157]. - Approximately 81% of the company's investments were qualifying assets as of September 30, 2024 [176]. - The Stock Repurchase Program allows for the repurchase of up to $10.0 million of common stock, with approximately $9.6 million remaining as of September 30, 2024 [176]. - The company has not made any repurchases of common stock under the Stock Repurchase Program during the nine months ended September 30, 2024 [176].