OFS Capital(OFS) - 2025 Q1 - Earnings Call Transcript

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]