OFS - Earnings call transcript Q2 2024 | OFS Capital Corporation

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Operator

Good day, and welcome to the OFS Capital Corporation Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Steve Altebrando for opening remarks. Please go ahead.

Stephen Altebrando

Good morning, everyone, and thank you for joining us. today and Rashid, Chief Jeff and call Chief Chairman Financial the Treasurer. Officer; Executive Cerny, on are our Bilal and Officer Also the company's

and other other risk to beyond call the uncertainties that in begin, to anticipated defined as could results management of and such time results securities reflect known guarantees risks, including made factors and note way opinions actual factors we statements applicable differ to SEC. may time statements. in future that cause are unknown Such the are some assumptions, Before on forward-looking from control, not management's The please under subject factors our this performance concerning from various and described the laws. statements by materially webcast filings uncertainties constitute Capital statements and are and expectations with OFS

we Although and any those those inaccurate, assumptions assumptions prove on incorrect. based assumptions could result, statements reasonable, believe these forward-looking be could also a of as are the

should on call call. With and no Rashid. undue date and Executive as this statements. the forward-looking forward-looking turn any I'll statements forward-looking reliance Chairman made all statements of these place to update undertakes speak duty of Capital over only Bilal OFS to that, the You not Chief herein, Officer,

Bilal Rashid

you, Earlier we this announced morning, our Thank Steve. second quarter earnings.

up value Our by the from $X.XX $XX.XX, quarter. share prior net to per asset X.X% increased

that XX% being benefit loan we our rate While the rate. of fair XX% fixed to believe being positioning, environment at value current debt and continue we portfolio rate our uncertain, our balance interest from remains sheet floating with of

for quarter $X.XX share income per the share decreased quarter Our per first quarter. from to in this the net $X.XX investment

investments. net last significant certain investment the items, equity X from quarter recall, including reflected of from our you As nonrecurring dividends nonrecurring income

minority by income $X.X primarily recent our increasing are the discuss in last we are Jeff equity The net assets call. In quarter $XX.X the by we investment our in interest-earning upswing being regard, net impact our positions equity sheet, The more quarter's income certain investment for continuing in to million position. is a our explore we noninterest-earning that focused converting improvement delevered following into our trough. investment value will on in alternatives at this primarily balance to as This fair attributed largest appreciating of on of detail. That million end. reflects which mentioned part in to fundamental value position quarter, equity performance rebounded Pfanstiehl, an said,

more date, this a than reminder, only modest received at distributions $XXX,XXX. a million approximately XXx of in As our is cost. or XX position invested in approximately years we cost ago To a we have $X.X

macroeconomic our to is Turning We the for environment. it well positioned portfolio. believe current

part industries. services. loan believe sector fair exposures our remains wholesale defensively healthcare, diversified of our in business we At and positioned. manufacturing, long-standing remain well cyclical that highly at As value We trade avoiding committed investment end, to discipline, and quarter portfolio our largest are

lien the and key senior discipline XXX% loans. higher approximately Another first value of loan capital of portfolio in structure, fair second investing our part is investment our and at with lien secured

subdued, clarity more originations, remain we as the in meantime, on In companies. interest remains the In in M&A we new terms our though later year an supporting of activity anticipate in get portfolio existing activity rates. increase we active

the our of in of XX% benefit or later, debt our to continues financing our XXXX view, our debt second is outstanding At of quarter, our matures XXX% company. unsecured. In the outstanding end and

XXXX. matures Paribas loan in Our non-recourse $XXX BNP facility with June million senior

Our is corporate mark-to-market flexible no with line credit provisions. of

which average XXXX, is pricing. of As we current X.X%, before, locked bearing than rate coupon have lower unsecured a million in discussed weighted notably $XXX market fixed we of in debt

through known the credit which adviser, environment, navigate expertise market in more the details a call and over the billion turn in this point, quarter. color manages this Chief we experience our confidence for cycles. At to the more than across Jeff to I'll and record and of multiple markets, classes multiple Financial asset structured industries, credit XX-year you Officer, we track and approximately give has have has Cerny, As $X our

Jeffrey Cerny

Good Bilal. Thanks, everyone. morning,

to share we investments; Bilal received sheet, primarily resulting mentioned, first, to quarter first a in income we delever continued the $X.XX couple of net our As investment posted which we from first the in was the dividends nonrecurring certain of and quarter base. equity per second, quarter, second for asset down factors: a balance from due X smaller

to December June has ratio XX Our decreased X.XXx leverage XX. from at GAAP X.XXx at

of rate distribution based XX.X% yield quarter at stock annualized current our represents end. Our price a common on the

We also the third will at quarter. share remain announced for that our per $X.XX quarterly distribution

We net rate. income investment once distribution are improving again on exceeding keenly and focused our

As Bilal to our to Pfanstiehl increase actively equity exploring discussed, are income. some our monetize investments, specifically alternatives we in stake noninterest-bearing minority investment net

increase This equity unrealized Our due minority and of investment per asset to most increased Holdings net segments approximately positions. certain in position was $X.XX portfolio, notably by our value CLO depreciation certain equity this our Pfanstiehl primarily quarter. in share

new quarter, of nonaccrual of stable, at remains were believe total had value X.X% this we portfolio nonaccruals our status and no at on investments the We quality quarter's end. the fair overall

including smaller quarter. $X.X income to sheet. the this $XX.X investment the to previously the of Turning driven the repayments to the as million factors $X.X as as down nonrecurring first asset million delevered quarter approximately mentioned, base income we I was balance in statement. by well was This dividends due approximately Total received largely million the

period million, expense debt as the outstanding interest regulatory stands XXX% to in our during mentioned, just due $X.X were well lower as asset incentive decrease fees. management in expenses a activities to lower I ratio base from delevering end. Total average related coverage Our at balances at result primarily and the quarter XX.X% down to

income quarter. $X.XX second per was As I net for share mentioned, investment the

our also debt loan end, floating approximately XX% at outstanding net quarter In was was addition while believe is XX% and we outstanding debt portfolio is our our matures positioning value given It this worth investment XX% balance of in is rate. later, at to that that intentions quarter or to of noting sheet income, our unsecured. increase fair beneficial that of of XXXX all outstanding debt our approximately fixed our rate,

our overall the We despite to last portfolio uncertain environment. believe remains compared performance to stable quarter our of this investments. macroeconomic companies relatively Turning

We to We are committed M&A capital being our cautious originations new underwriting. the remain and slow. senior selective and in in about activity remains structure

companies they continue with add-on to opportunities growth. work for portfolio We as our identify

as XX, are slightly we in $X.X portfolio investments totaling yield our At our the X% fund the unique Bilal. of portfolio quarter-over-quarter. and quarter, June commitments includes X.X% we prepayment in investments a had million the on loans, credit weighted portion facilities in majority improved structured quarter to issuers turn XX loan of on of our amortized deferred cost the portfolio fees The approximately XX. Based our over under securities as was X% investment to and about back secured senior of end million of that, fair is on XX.X%, was investment $XXX.X up value basis. senior performing interest-bearing income of value of I'll of subordinated fair equity to As amortization securities. fees. With secured which average and call companies. of the This loan interest all XX% approximately The finance XX% June investments various loans, debt, to end, had portfolio at XXX% comprised

Bilal Rashid

with new In in quarter. Jeff. remains we closing, you, believe our portfolio no nonaccruals the solid Thank

focused assets. are the investment We quarters, pursuing into the redeploying net equity of on by sale and in income positions interest-earning specifically coming noninterest-earning increasing proceeds certain the

the our known XXX% remains of on approximately and preservation, quality overall secured, of senior being portfolio confident fundamentals with in capital our focus remain and Our value fair at portfolio. we

years, relied BDC Since beginning billion has on our has with invested returns have on our XXXX, the cumulative over generating risk-adjusted while past attractive realized experience the of and which investment believe just We more than we us long-standing a of net served well. portfolio. X.X% loss the discipline, $X.X XX

We business billion adviser adviser. billion the With a reputation $X has relationships. especially our capital to market experience and asset and platform affiliated broad of management size, due long-standing a credit believe $XX including equipped corporate our our group, successfully markets to expertise navigate this is banking with

corporate years. cycles Our through gone over the platform credit credit multiple has last XX-plus

they affiliates in the aligned as are approximately adviser an XX% also company. strongly ownership Our with shareholders and maintain

call operator, that, please up for questions. With open the

Operator

for the time, concluded. presentation. today's has this At you Thank attending conference

You may now disconnect.

OFS Capital (OFS) 2 Aug 242024 Q2 Earnings call transcript