Release Date: May 03, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net investment income increased to $0.42 per share, a 20% rise from the previous quarter, primarily due to nonrecurring items.
- OFS Capital Corp (OFS, Financial) continues to cover its distribution, maintaining a $0.34 per share payout, representing a 13.7% annualized yield based on the quarter's stock price.
- The loan portfolio remains strong with 100% at fair value in first and second lien senior secured loans, positioning the company well in a volatile macroeconomic environment.
- OFS Capital Corp (OFS) has a robust balance sheet with 100% of outstanding debt maturing in 2026 or later, and 70% of the debt is unsecured.
- The company's advisor manages approximately $4 billion across various asset classes, providing experienced oversight through multiple credit cycles.
Negative Points
- Net asset value per share declined to $11.08 from $12.09 at year end, primarily due to unrealized depreciation in several investments, notably in fin Steel Holdings.
- One borrower was placed on nonaccrual status this quarter, representing about 2% of the portfolio at fair value, contributing to a total of 4.8% of investments at fair value on nonaccrual status.
- Interest income decreased partly due to a smaller overall investment portfolio, impacting the company's earnings from its core activities.
- The company experienced a decline in the regulatory asset coverage ratio, influenced by unrealized depreciation in a few positions.
- Despite a stable investment income yield of 13%, there was a quarter-over-quarter decrease of about 1.1%, attributed to nonaccrual loans and a slight decrease in yields on structured finance.
Q & A Highlights
Q: Hey, guys, a quick question. Tom, do you guys feel with the interest income down this quarter, do you feel like that can come back or some you guys.
A: Morning, Mitchell, this is Jeff. Thanks for the question, Tom. Yes, I would there is a path Absolutely. As you know, we are continuing to realize on certain equity investments and one of our largest positions as a non-interest earning asset. So certainly some you know, as we think about converting that to an interest earning asset, we should be able to cover cover our dividend going forward.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
