OFS Capital(US:OFS)2023-05-05 12:01Financial Performance - As of March 31, 2023, the net asset value (NAV) per common share was $13.42, a slight decrease from $13.47 at December 31, 2022[139]. - For the quarter ended March 31, 2023, total investment income increased to $14.3 million from $14.0 million in the prior quarter, driven by a $0.8 million increase in dividend income[140]. - The net investment income for the quarter ended March 31, 2023, was $4.95 million, compared to $4.73 million in the previous quarter[173]. - Adjusted net investment income for the quarter ended March 31, 2023, was $4.95 million, or $0.37 per share, compared to $4.73 million, or $0.35 per share, for the quarter ended December 31, 2022[187]. - The total net loss on investments for the three months ended March 31, 2023, was $1.1 million, compared to a net loss of $2.3 million for the three months ended December 31, 2022[182]. Investment Portfolio - The fair value of the debt investment portfolio totaled $309.9 million in 47 portfolio companies, with approximately 99% being senior secured loans[156]. - The total portfolio company investments amounted to $412.736 million at fair value as of March 31, 2023, compared to $412.058 million as of December 31, 2022[162]. - Approximately 99% of the loan portfolio at fair value consisted of senior secured loans as of March 31, 2023[162]. - The three largest industries by fair value in the portfolio were Manufacturing (27.5%), Health Care and Social Assistance (16.5%), and Wholesale Trade (13.1%), totaling 57.1% of the portfolio[163]. - The aggregate amortized cost and fair value of loans on non-accrual status were $36.5 million and $11.5 million, respectively, as of March 31, 2023[168]. Debt and Interest Rates - The weighted-average performing income yield on debt investments rose to 12.3% from 11.5% in the prior quarter, attributed to rising interest rates with 94% of the loan portfolio consisting of floating rate loans[140]. - The weighted-average debt interest costs increased to 5.8% compared to 5.5% for the quarter ended December 31, 2022, primarily due to SOFR rate increases[141]. - Approximately 292.2 million, or 94%, of the debt investments bore interest at variable rates, with 54% having transitioned from LIBOR to SOFR[146][147]. - The effective interest rate on the PWB Credit Facility was 8.55% as of March 31, 2023[203]. - The BNP Facility allows for borrowings up to $150.0 million, with $101.0 million drawn as of March 31, 2023, and an effective interest rate of 8.00%[208][210]. Cash and Commitments - As of March 31, 2023, the company held cash of $10.8 million, including $3.1 million held by SBIC I LP and $3.6 million held by OFSCC-FS[188]. - The company had an unused commitment of $20.0 million under the PWB Credit Facility and an unused commitment of $49.0 million under the BNP Facility as of March 31, 2023[189]. - The company had $10.8 million in cash and cash equivalents, with additional unfunded commitments of $20.0 million and $49.0 million under the PWB Credit Facility and BNP Facility, respectively[219]. Dividends and Distributions - The Board declared a distribution of $0.33 per share for the second quarter of 2023, payable on June 30, 2023[145]. - The company has a variable dividend policy aiming to distribute at least 90-100% of taxable quarterly income[224]. Market Risks and Economic Environment - The ongoing war between Russia and Ukraine, rising interest rates, and elevated inflation have introduced significant volatility in financial markets, impacting the company's market risks[229]. - The transition from LIBOR to SOFR for floating interest rates is ongoing, affecting the company's cost of funding and investment portfolio valuation[231]. - The company reported that a basis point increase in interest rates could lead to a net change in interest income of up to $3.112 million, while a decrease could result in a net change of up to $(2.735) million[234]. Management and Governance - The company appointed Kyle Spina as Chief Accounting Officer effective April 21, 2023, following the resignation of Mr. Teune[227].