OFS Capital Corporation Announces Second Quarter 2013 Financial Results
OFS Capital Corporation Announces Second Quarter 2013 Financial Results
ROLLING MEADOWS, Ill.--(BUSINESS WIRE)-- OFS Capital Corporation (NAS: OFS) ("OFS Capital" or the "Company") today announced its financial results for the fiscal quarter ended June 30, 2013, OFS Capital's second full quarter of operations following its initial public offering ("IPO") in November 2012.
HIGHLIGHTS
($ in millions, except for per share data)
Portfolio Results | June 30, 2013 | ||||
Investments, at fair value | $ | 228.3 | |||
Total assets | $ | 242.4 | |||
Net assets | $ | 142.0 | |||
Net asset value per share | $ | 14.76 | |||
Weighted average yield on debt investments | 7.23% | ||||
Quarter Ended June 30, | ||||||||
Operating Results | 2013 | 2012 | ||||||
Total investment income | $ | 4.2 | $ | 4.5 | ||||
Net investment income | $ | 1.5 | $ | 1.1 | ||||
Net increase (decrease) in net assets resulting from operations | $ | 3.3 | $ | (0.4) | ||||
Portfolio Activity | ||||||||
Investments in new portfolio companies, at par | $ | 9.0 | $ | 8.1 | ||||
Number of new portfolio companies | 2 | 3 | ||||||
Number of portfolio companies at end of period | 57 | 49 | ||||||
Other Key Data Points
On July 31, 2013, OFS Capital paid a second quarter 2013 dividend of $0.34 per share to shareholders of record as of July 17, 2013.
The aggregate fair value of OFS Capital's investment assets was 99.4% of cost at June 30, 2013.
"We are focused on keeping our OFS Capital WM senior loan subsidiary fully invested in senior secured floating rate assets, which have enhanced the earnings of OFS Capital," said Glenn Pittson, Chairman and Chief Executive Officer of OFS Capital. "At the same time, and as we announced last week, we are making progress towards our goal of converting our Tamarix Capital Partners, L.P. investment into a drop-down small business investment company fund within OFS Capital."
PORTFOLIO AND INVESTMENT ACTIVITY
During the second quarter of 2013, OFS Capital closed senior secured debt investments totaling $9.0 million in two new portfolio companies. Tamarix Capital Partners, L.P. (the "SBIC Fund") closed a first lien debt investment with a face amount of $5.0 million in one new portfolio company, in which it also obtained an equity stake at no cost.
The total fair value of OFS Capital's investment portfolio was $228.3 million as of June 30, 2013, including $220.0 million in senior secured debt investments in 56 portfolio companies held in the OFS Capital WM, LLC senior loan vehicle ("OFS Capital WM") (with a 7.23% weighted average yield to fair value) and an equity investment in the SBIC Fund with a fair value of $8.3 million, representing the Company's 67.5% limited partnership interest in the SBIC Fund.
The SBIC Fund now has investments in five portfolio companies. As of June 30, 2013, the investment portfolio held by the SBIC Fund consisted of outstanding loans with an aggregate principal balance of $26.5 million and equity investments with a fair value of $4.6 million.
RESULTS OF OPERATIONS
Investment income
Total investment income was $4.2 million for the quarter ended June 30, 2013, compared with $4.5 million for the same period in the prior year. The $0.3 million decrease in total investment income was attributable primarily to a $0.6 million reduction in interest income from Tamarix Capital Partners, L.P. as a result of the Company's deconsolidation of Tamarix Capital Partners, L.P. effective July 27, 2012.
Total expenses
Total expenses were $2.8 million for the quarter ended June 30, 2013, compared with $3.4 million for the same period in the prior year. The $0.6 million decrease in total expenses was attributable primarily to a $0.6 million reduction in interest expense owing to a decrease in revolving credit facility borrowings. Other expense changes relative to the prior comparable period included a $0.3 million reduction in management fees (relating chiefly to $0.5 million in management fees incurred by Tamarix Capital Partners, L.P. for the quarter ended June 30, 2012) and a $0.1 million decrease in general and administrative expenses, offset by a $0.2 million increase in administrative fees (related to costs incurred by the Company under the Administration Agreement entered into in connection with the IPO) and a $0.1 million increase in professional fees.
Net investment income
Based on the foregoing, net investment income was $1.5 million and $1.1 million, respectively, for the quarters ended June 30, 2013 and June 30, 2012, respectively.
Net realized and unrealized gain (loss) on investments
For the quarter ended June 30, 2013, the Company did not recognize any realized gains or losses. Net unrealized gain on investments totaled $1.8 million for the quarter ended June 30, 2013, comprised of $0.9 million of net unrealized gain on non-affiliate investments (i.e., investment assets in OFS Capital WM) and $0.9 million of net unrealized gain on affiliate investments (the Company's limited partnership interest in the SBIC Fund).
For the quarter ended June 30, 2012, net realized loss on investments totaled $1.2 million, owing to a $1.2 million net realized loss on non-affiliate investments (relating to a debt investment sale by OFS Capital WM). Net unrealized loss on investments totaled $0.9 million for the quarter ended June 30, 2012, consisting of $0.9 million of net unrealized losses on non-affiliate investments (i.e., investment assets in OFS Capital WM).
Net increase (decrease) in net assets resulting from operations
Net increase in net assets resulting from operations was $3.3 million for the quarter ended June 30, 2013, compared with a net decrease in net assets resulting from operations of $0.4 million for the quarter ended June 30, 2012.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2013, OFS Capital had $10.0 million in cash and cash equivalents, $94.2 million in debt outstanding, and $40.0 million in borrowing availability on its revolving credit facility.
The Company intends to continue to use its liquidity to finance its investment objectives.
CONFERENCE CALL
A conference call is scheduled for today at 10:00 a.m. Eastern Time. Glenn Pittson, Chairman & Chief Executive Officer, will host the call along with Robert Palmer, Chief Financial Officer.
Interested parties can listen to the call via the following:
INTERNET: | Go to www.ofscapital.com at least 15 minutes prior to the start time of the call to register, download and install any necessary audio software. A replay will be available for 90 days on our website at www.ofscapital.com | ||
PHONE: | 888-317-6016 (Domestic) or 412-317-6016 (International) | ||
REPLAY: | Available through August 15, 2013 at 9:00 a.m. Eastern Time. 877-344-7529 (Domestic) or 412-317-0088 (International) - conference ID #10031610 | ||
For more detailed discussion of the financial and other information included in this press release, please refer to the Company's Form 10-Q for the quarter ended June 30, 2013, which is to be filed with the Securities and Exchange Commission.
EXCERPTS FROM OFS CAPITAL'S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOLLOW
OFS Capital Corporation and Subsidiaries | ||||||||
Consolidated Balance Sheets | ||||||||
(Amounts in thousands, except share and per share data) | ||||||||
June 30, | December 31, | |||||||
2013 | 2012 | |||||||
Assets | (unaudited) | |||||||
Investments, at fair value | ||||||||
Non-affiliate investments (cost of $222,175 and $231,781, respectively) | $ | 219,991 | $ | 227,542 | ||||
Affiliate investments (cost of $7,577 and $5,049, respectively) | 8,345 | 4,657 | ||||||
Total investments at fair value | 228,336 | 232,199 | ||||||
Cash and cash equivalents | 9,954 | 8,270 | ||||||
Restricted cash and cash equivalents | 623 | 623 | ||||||
Interest receivable | 876 | 1,292 | ||||||
Prepaid expenses and other assets | 360 | 326 | ||||||
Deferred financing costs, net of accumulated amortization of $1,521 and $1,336, respectively | 2,204 | 2,839 | ||||||
Total assets | $ | 242,353 | $ | 245,549 | ||||
Liabilities | ||||||||
Accrued professional fees | $ | 493 | $ | 463 | ||||
Interest payable | 836 | 1,222 | ||||||
Dividend payable | 3,272 | 1,628 | ||||||
Management fees payable | 867 | 667 | ||||||
Administration fee payable | 178 | 110 | ||||||
Other payables | 173 | 223 | ||||||
Due to affiliated entities, net | - | 9 | ||||||
Deferred loan fee revenue | 324 | 204 | ||||||
Revolving line of credit | 94,164 | 99,224 | ||||||
Total liabilities | 100,307 | 103,750 | ||||||
Net Assets | ||||||||
Preferred stock, par value of $0.01 per share, 2,000,000 shares authorized, | ||||||||
0 shares issued and outstanding as of June 30, 2013 and December 31, 2012 | - | - | ||||||
Common stock, par value of $0.01 per share, 100,000,000 shares authorized, | ||||||||
9,624,990 and 9,578,691 shares issued and outstanding as of June 30, 2013 and December 31, 2012 | 96 | 96 | ||||||
Paid-in capital in excess of par | 143,068 | 142,408 | ||||||
Distributions in excess of net investment income | (3,722 | ) | (94 | ) | ||||
Net unrealized appreciation (depreciation) on investments | 2,604 | (611 | ) | |||||
Total net assets | 142,046 | 141,799 | ||||||
Total liabilities and net assets | $ | 242,353 | $ | 245,549 | ||||
Number of shares outstanding | 9,624,990 | 9,578,691 | ||||||
Net asset value per share | $ | 14.76 | $ | 14.80 | ||||
OFS Capital Corporation and Subsidiaries | ||||||||||||||
Consolidated Statements of Operations (unaudited) | ||||||||||||||
(Amounts in thousands, except share and per share data) | ||||||||||||||
Pre-IPO prior to | Pre-IPO prior to | |||||||||||||
becoming a | becoming a | |||||||||||||
Business | Business | |||||||||||||
Development | Development | |||||||||||||
Company (1) | Company (1) | |||||||||||||
Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||
June 30, 2013 | June 30, 2012 | June 30, 2013 | June 30, 2012 | |||||||||||
Investment income | ||||||||||||||
Interest income from non-affiliate investments | $ | 4,236 | $ | 4,493 | $ | 8,601 | $ | 5,071 | ||||||
Dividend and fee income | - | 45 | - | 91 | ||||||||||
Total investment income | 4,236 | 4,538 | 8,601 | 5,162 | ||||||||||
Expenses | ||||||||||||||
Interest expense | 862 | 1,445 | 1,709 | 1,445 | ||||||||||
Amortization of deferred financing closing costs | 166 | 143 | 635 | 143 | ||||||||||
Management fees | 794 | 1,083 | 1,601 | 1,440 | ||||||||||
Professional fees | 509 | 388 | 759 | 403 | ||||||||||
Administrative fee | 177 | - | 457 | - | ||||||||||
General and administrative expenses | 262 | 341 | 532 | 378 | ||||||||||
Total expenses | 2,770 | 3,400 | 5,693 | 3,809 | ||||||||||
Net investment income | 1,466 | 1,138 | 2,908 | 1,353 | ||||||||||
Net realized and unrealized gain (loss) on investments | ||||||||||||||
Net realized gain (loss) on non-affiliate investments | - | (1,165 | ) | 5 | (1,165 | ) | ||||||||
Net change in unrealized depreciation on | ||||||||||||||
non-affiliate investments | 882 | (939 | ) | 2,055 | (939 | ) | ||||||||
Net change in unrealized depreciation on affiliate investments | 909 | - | 1,160 | - | ||||||||||
Net realized and unrealized gain (loss) on investments | 1,791 | (2,104 | ) | 3,220 | (2,104 | ) | ||||||||
Other income (loss) prior to becoming a business | ||||||||||||||
development company | ||||||||||||||
Income from equity interest in OFS Capital WM | - | - | - | 2,645 | ||||||||||
Net loss attributable to non-controlling interests | - | 29 | - | 29 | ||||||||||
Other loss | - | (3 | ) | - | (3 | ) | ||||||||
Total other income prior to becoming a business development company | - | 26 | - | 2,671 | ||||||||||
Net increase (decrease) in net assets before cumulative effect of accounting change | 3,257 | (940 | ) | 6,128 | 1,920 | |||||||||
Cumulative effect of accounting change | - | 570 | - | 570 | ||||||||||
Net increase (decrease) in net assets resulting from operations | $ | 3,257 | $ | (370 | ) | $ | 6,128 | $ | 2,490 | |||||
Net investment income per common share - basic and diluted | $ | 0.15 | $ | 0.30 | ||||||||||
Net increase in net assets resulting from operations per common share - basic and diluted | ||||||||||||||
