OFS Capital(US:OFS)2020-11-06 20:03Financial Data and Key Metrics Changes - The company increased its distribution to $0.18 per share, a 6% increase from the prior quarter, reflecting confidence in long-term business outlook and increased earnings [7] - Net asset value (NAV) per share increased approximately 11% over the prior quarter to $11.18, driven by higher fair value marks on investments [8][17] - Net investment income per share was $0.20 for the quarter, an increase over the previous quarter [10][19] - Total investment income for the quarter was approximately $10.5 million, a decrease of $500,000 from the second quarter [18] Business Line Data and Key Metrics Changes - The portfolio consists of 74 investments totaling approximately $456.3 million on a fair value basis, with 91% in senior secured loans [22] - 89% of loan investments were floating rate loans, with LIBOR floors on approximately 88% of the floating rate loan portfolio [22] - The overall weighted average yield to cost on performing debt and structured finance note investments remained constant at approximately 10.1% [23] Market Data and Key Metrics Changes - Approximately 91% of the loan portfolio was senior secured at the end of the third quarter, compared to 79% two years ago, indicating a shift towards more secure investments [9] - The company has been focusing on noncyclical sectors with minimal exposure to oil and gas and metals and mining [9] Company Strategy and Development Direction - The company is cautiously increasing origination activity after significantly reducing it during the second quarter due to the pandemic [10] - The company aims to support portfolio companies in pursuing growth opportunities, both organically and through acquisitions [8][21] - The company has a strong liquidity position, with over 88% of its debt maturing in 2024 or later, providing operational flexibility [11][27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the performance of portfolio companies and the increase in pipeline activity, while remaining cautious amid ongoing uncertainty [15] - The company is focused on preserving strong liquidity and a healthy balance sheet while navigating the current economic environment [20][26] - Management highlighted the importance of the advisor's experience and alignment of interests with shareholders, as the advisor owns 22% of the outstanding shares [13][28] Other Important Information - The company closed a $25 million unsecured bond, providing additional flexible capital for new investments and debt repayment [12] - The company has made both new investments and add-ons to existing companies pursuing growth opportunities [26] Q&A Session Summary Question: Consideration of Share Buyback Instead of Dividend Increase - Management confirmed that the Board has instituted a share buyback program and is evaluating it continuously, while also considering the current share price relative to NAV [32]