OFS - Earnings call transcript Q3 2024 | OFS Capital Corporation

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the OFS Capital Third Quarter 2024 Earnings Conference Call. [Operator Instructions] Also please be aware that today's call is being recorded.

I would now like to turn the call over to Steve Altebrando. Please go ahead, sir.

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

call the known begin, defined cause as and securities reflect made note opinions we statements other results, future applicable may materially statements. that Such assumptions, Before on performance results forward-looking please under subject this various to and laws. statements Capital factors by differ of webcast and constitute statements expectations and uncertainties could guarantees management and are concerning from risks, not actual anticipated to that unknown are such OFS

The factors the uncertainties beyond risk described way from some time SEC. in factors and with are to in filings the management's control, including time other our

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

these forward-looking undue should herein, as Capital any update speak call. date statements on not of undertakes place to only the forward-looking of You statements all statements. forward-looking this duty OFS reliance and made no

the turn I'll and to over Bilal Rashid. that, With Chief Executive Chairman Officer, call

Bilal Rashid

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

increased investment by to net share. X.X% income Our per $X.XX approximately

to value decreased asset per Our net share. modestly $XX.XX by share X.X% per

With quarter, rotating by certain had we we net this respect this longer to into term, primarily noninterest-earning assets. investment an remain interest-earning increasing improvement income, while positions metric focused on equity

position. to call, last Pfanstiehl, continue our explore alternatives equity on we investment discussed minority we in for potential As our largest our equity

in $X.X of the quarter million million fundamental attributed this the to appreciating In end. value by improve company. to primarily at value of fair improved continued $XX.X position is performance meantime, the The increase the to quarter,

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

our quarter equity of markdowns finance loan by of increase Our value value Pfanstiehl. X.X% as result were notably a offset the by asset during our positions, net which positions, decreased in certain an and the per share in structured

metrics compared been nonaccrual X quarter. the to fair total our quarter nonaccrual of loan, previously we quarter, representing the had status at X.X% this of relatively prior stable were and at We during loan on Our percentage fair removed which as on value total portfolio X a the value. portfolio nonaccrual only placed

the Overall, continues to for well current we portfolio be positioned the macroeconomic environment. believe

discipline, diversified We our we As cyclical part to positioned. industries. that remain avoiding investment and believe defensively of well remains portfolio our highly long-standing committed loan

largest and value exposures our sector in fair end, at are manufacturing quarter At healthcare.

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

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

with Our Paribas nonrecourse rate in XXXX. June million floating $XXX matures facility BNP

floating and Bank additional credit rate corporate us of California line of flexibility. liquidity provides Our

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

will we rate our ahead, interest near reductions additional in rate the and Reserve on cut medium potential to interest margin. Looking by net the recent Federal believe term the some interest put pressure

on borrowers. impact decreases our on interest debt service as loan lower that believe the also rates have portfolio the the health we it of should However, a positive burden

portfolio. well rates for the our Additionally, of which we risk recession, believe would that lower bode reduce a

potential net pick expect the activity and investment positive on income We which fee lead originations could quarters, income. M&A up to coming a in to higher and impact

classes markets experience credit confidence and has have industries and $X.X approximately billion multiple has manages known we environment, of market this our credit across more multiple asset through than the which XX-year record navigate track we and in structured cycles. As the expertise a adviser, in

our to Jeff this call to over Financial Chief the the Officer, quarter. turn give point, and you I'll At Cerny, color more for details

Jeffrey Cerny

everyone. Bilal. Thanks, morning, Good

net for up $X.XX which we income due the of posted in As the which G&A a quarter, Bilal in was quarter, share per income. $X.XX decline investment third from second the offset to decrease investment per mentioned, than more primarily expenses share modest

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

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

focused our rate. are income investment net improving on distribution so exceeds We that

equity discussed, investment Pfanstiehl. As actively increase minority net investments our exploring equity primarily Bilal we our are stake to noninterest-earning income, to certain in monetize alternatives potential

markdowns Our notably X.X% loan net value approximately offset which our quarter. primarily $X.XX result this decrease asset an value during by and certain the the positions, Pfanstiehl, increase of positions in finance were the per or equity structured of share quarter Bilal by This in described. our was decreased as

our on It Our rating total at nonaccrual this scale. value. downgraded JP the was of X.X% internal X fair new loan, represents quarter portfolio credit based Intermediate

In on removed addition, X the which had we quarter. been status during previously loan, nonaccrual

our the a total were quarter. fair relatively prior metrics value portfolio stable percentage of at nonaccrual Our as compared to

stable. the continues for investments at be were the X.X% value of on at quarter to Overall, well believe portfolio we status the overall quality the positioned and of environment, portfolio fair our end. believe current we macroeconomic nonaccrual remains total

this income X at income repaid investment interest approximately income handful positions. redeployed to par which This was of large quarter. a new the positions X% driven our Total of $XX.X million being as we Turning primarily impacted statement. into to loan was proceeds loan the by down

expenses administration million, at due G&A expenses, Our decrease quarter in a fees. notably a during Total reduction regulatory to primarily down earlier, as period most I mentioned the were in X.X% $X.X to asset stands coverage ratio XXX% at end.

matures approximately $X.XX our debt in our unsecured. outstanding third plans quarter also debt later of Turning of at to It it net investment -- up and or described outstanding the was for investment XXXX is and worth $X.XX increase noting to all income. was quarter. We to net per income end, that our share XX%

our macroeconomic believe do of investments. the overall will the performance that to interest future despite remained overall. the companies our We recent relatively We and to compared believe stable environment. expected our portfolio rate this benefit reductions reduction last quarter Turning borrowers uncertain

to We senior are in and in capital the underwriting. selective structure being our committed

we to has M&A our companies add-on work remained with growth. As as continue subdued, for portfolio activity they identify opportunities

and XX, our September in of senior commitments of The value we $X.X are fund various our XXX% fair of companies. secured to XX. million in facilities was of As had investments September our as loan majority credit portfolio portfolio to at investments loans under

on of and fair At X% portfolio finance had senior totaling in investments of the the XX% securities equity structured investment Based a quarter, loans, XX on end, was end approximately XX% basis. our $XXX.X securities. cost quarter as amortized issuers comprised value secured we unique million of

prepayment average This about deferred on the interest, performing includes income all of X.X% weighted XX.X%, loan and investment interest-bearing amortization the is portion up slightly of quarter-over-quarter. The fees. portfolio yield improved which fees to

that, With over I'll turn the back Bilal. call to

Bilal Rashid

closing, proceeds we our assets. In in exploring Jeff. income into specifically on focused investment the redeploying by positions certain quarters, you, net interest-earning increasing the and the coming remain noninterest-earning of Thank equity sale

us while a past our over on and returns remain portfolio. billion long-standing fundamentals of XXXX, We capital quality served well to realized invested just confident cumulative believe our Since the our discipline X.X% attractive overall the has beginning the focus We portfolio. experience on loss of generating of we XX in and the has investment and preservation, net BDC more years. risk-adjusted with than $X continue

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

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

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

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

Operator

conference question-and-answer [Operator also this and today's Thank all And session attending for today's our presentation. will call. you Instructions] will conclude conclude

You may disconnect lines. now your

OFS Capital (OFS) 1 Nov 242024 Q3 Earnings call transcript