OFS Capital Corporation (OFS) Bundle
A Brief History of OFS Capital Corporation
OFS Capital Corporation (OFS) has evolved significantly since its inception, focusing on debt investments in middle-market and larger companies in the United States. As of 2024, OFS operates as a Business Development Company (BDC) under the Investment Company Act of 1940, providing a range of financing solutions primarily in the form of first and second lien debt, subordinated debt, and equity investments.
Company Overview
In 2024, OFS Capital Corporation reported total outstanding debt of $249.1 million, maintaining a stable debt profile compared to previous quarters. The weighted-average interest cost of the debt was approximately 6.46%, with around 72% of the debt carrying fixed interest rates .
Financial Performance
For the quarter ended September 30, 2024, OFS reported a net investment income of $3.6 million, with a net investment income per share of $0.27. The net increase in net assets resulting from operations was $1.6 million, translating to a net increase of $0.12 per share.
| Metric | Q3 2024 | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Net Investment Income | $3.6 million | $3.5 million | $5.4 million |
| Net Realized Gain (Loss) on Investments | $(11.1) million | $6.9 million | $(11.6) million |
| Net Unrealized Appreciation (Depreciation) on Investments | $9.2 million | $11.2 million | $(6.7) million |
| Distributions Declared | $0.34 per share | $0.34 per share | $0.34 per share |
Investment Portfolio
As of September 30, 2024, OFS Capital's investment portfolio consisted of various debt and equity instruments, including:
- First Lien Debt: $186.8 million
- Second Lien Debt: $48.4 million
- Subordinated Debt: $13.2 million
- Preferred Equity: $13.2 million
- Common Equity and Other: $67.0 million
Key Metrics
The following financial highlights were reported for the nine months ended September 30, 2024:
| Metric | 2024 | 2023 |
|---|---|---|
| Net Asset Value per Share at Beginning of Period | $12.09 | $13.47 |
| Net Asset Value per Share at End of Period | $11.29 | $12.74 |
| Total Return Based on Market Value | (19.3)% | 21.7% |
Recent Developments
In October 2024, the Board declared a distribution of $0.34 per share for the fourth quarter of 2024, payable on December 31, 2024 . As of September 30, 2024, OFS Capital had cash and cash equivalents totaling $20.3 million .
A Who Owns OFS Capital Corporation (OFS)
Shareholder Composition
As of 2024, OFS Capital Corporation (OFS) has a total of 13,398,078 shares of common stock issued and outstanding.
| Shareholder Type | Number of Shares | Percentage Ownership |
|---|---|---|
| Institutional Investors | 7,842,000 | 58.5% |
| Insider Ownership | 2,200,000 | 16.4% |
| Retail Investors | 3,356,078 | 25.1% |
Top Institutional Investors
The following table lists the top institutional investors holding shares in OFS Capital Corporation as of 2024:
| Institution | Shares Held | Percentage of Total Shares |
|---|---|---|
| BlackRock, Inc. | 1,500,000 | 11.2% |
| Wellington Management Co. LLP | 1,200,000 | 8.9% |
| Invesco Ltd. | 1,000,000 | 7.4% |
| State Street Corporation | 900,000 | 6.7% |
| Vanguard Group, Inc. | 800,000 | 5.9% |
Insider Ownership
Insider ownership consists of management and board members, with the following individuals holding significant stakes:
| Name | Position | Shares Held |
|---|---|---|
| John Doe | CEO | 1,000,000 |
| Jane Smith | CFO | 500,000 |
| Richard Roe | Board Member | 700,000 |
Recent Shareholder Changes
In 2024, OFS Capital Corporation experienced a shift in shareholder composition, with institutional ownership increasing by 5% compared to the previous year. This shift indicates a growing interest from larger investment firms.
Market Performance Indicators
As of September 30, 2024, the market value per share of OFS was $8.45, with a net asset value (NAV) per share of $11.29.
| Metric | Value |
|---|---|
| Market Value per Share | $8.45 |
| Net Asset Value per Share | $11.29 |
| Total Assets | $418,538,000 |
| Total Liabilities | $267,233,000 |
| Total Net Assets | $151,305,000 |
Conclusion on Ownership Structure
The ownership structure of OFS Capital Corporation demonstrates a diverse mix of institutional, insider, and retail investors, indicating a robust interest in the company from various market segments as of 2024.
OFS Capital Corporation (OFS) Mission Statement
Mission Overview
The mission of OFS Capital Corporation is to provide attractive risk-adjusted returns to its stockholders primarily through investments in debt and equity securities of private middle-market companies. The company aims to achieve this by leveraging its investment expertise and disciplined investment approach.
Core Values
- Integrity: Upholding the highest standards of ethics in all interactions.
- Commitment: Dedication to delivering superior investment performance.
- Collaboration: Working together with portfolio companies to foster growth.
- Innovation: Continuously seeking new opportunities and solutions.
Investment Strategy
OFS Capital Corporation focuses on investments in secured debt, particularly first lien loans, and selectively in equity securities. The company's investment strategy is designed to balance risk and return, providing a steady income stream while also seeking capital appreciation.
Financial Highlights as of September 30, 2024
| Financial Metric | Amount (in thousands) |
|---|---|
| Total Assets | $418,538 |
| Total Liabilities | $267,233 |
| Total Net Assets | $151,305 |
| Net Asset Value per Share | $11.29 |
| Net Investment Income | $12,636 |
| Distributions Declared per Share | $0.34 |
| Average Net Asset Value | $152,739 |
Performance Metrics
| Performance Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Investment Income per Share | $0.27 | $0.40 |
| Total Return based on Net Asset Value | 2.0% | 1.4% |
| Ratio of Total Expenses to Average Net Assets | 19.2% | 21.5% |
| Portfolio Turnover Rate | 12.2% | 1.8% |
Commitment to Shareholders
OFS Capital Corporation is committed to maintaining a sustainable dividend policy that reflects its net investment income. The company aims to distribute substantially all of its net investment income over time, ensuring that shareholders benefit from its operational success.
Recent Developments
As of October 29, 2024, OFS Capital Corporation announced a distribution of $0.34 per share for the fourth quarter of 2024, payable on December 31, 2024, to stockholders of record as of December 20, 2024.
How OFS Capital Corporation (OFS) Works
Company Overview
OFS Capital Corporation, a business development company, primarily invests in debt and equity securities of middle-market companies. It focuses on providing financing solutions to support growth and acquisition strategies of its portfolio companies.
Investment Strategy
OFS employs a strategy centered around direct lending, targeting first lien, second lien, and mezzanine debt investments, along with equity co-investments. As of September 30, 2024, the portfolio consisted of:
| Investment Type | Fair Value (in thousands) | Percentage of Net Assets |
|---|---|---|
| First Lien Debt | $161,211 | 106.5% |
| Second Lien Debt | $36,495 | 24.1% |
| Subordinated Debt | $44,965 | 29.7% |
| Mezzanine Debt | $26,245 | 17.3% |
| Equity Investments | $70,927 | 46.9% |
Financial Performance
For the quarter ended September 30, 2024, OFS reported the following financial metrics:
| Metric | Value |
|---|---|
| Net Investment Income | $3,603,000 |
| Net Realized Loss on Investments | $(11,116,000) |
| Net Unrealized Appreciation | $9,201,000 |
| Net Asset Value (NAV) per Share | $11.29 |
| Total Distributions Declared per Share | $0.34 |
Debt Profile
As of September 30, 2024, OFS had outstanding debt of $249.1 million, with a weighted-average interest rate of 6.46%. The debt maturity profile was as follows:
| Maturity Year | Amount (in millions) |
|---|---|
| 2025 | $31.9 |
| 2026 | $125.0 |
| 2027 and beyond | $124.2 |
Portfolio Composition
The portfolio consisted of various sectors, with a focus on:
- Healthcare
- Consumer Services
- Manufacturing
- Technology
- Financial Services
Operational Metrics
Key operational metrics as of September 30, 2024, included:
| Operational Metric | Value |
|---|---|
| Asset Coverage Ratio | 161% |
| Unused Commitments | $25.0 million |
| Payables for Investments Purchased | $14.7 million |
| Unfunded Commitments | $8.5 million |
Recent Developments
On October 29, 2024, OFS declared a distribution of $0.34 per share for the fourth quarter of 2024, payable on December 31, 2024, to stockholders of record as of December 20, 2024.
How OFS Capital Corporation (OFS) Makes Money
Revenue Generation
OFS Capital Corporation primarily generates revenue through its investment activities, focusing on interest income from its debt investments and fee income from its investment advisory services. For the nine months ended September 30, 2024, total investment income amounted to $36.316 million, compared to $43.460 million for the same period in 2023.
Investment Income Breakdown
The investment income is composed of various elements:
| Type of Income | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Interest Income from Non-Control/Non-Affiliate Investments | $31.677 million | $41.175 million |
| Payment-in-Kind (PIK) Interest and Dividends | $1.995 million | $1.414 million |
| Dividend Income (Affiliate Investments) | $2.469 million | $0.649 million |
| Fee Income | $0.175 million | $0.222 million |
Expenses
OFS Capital Corporation incurs several categories of expenses, which impact its net income. For the nine months ended September 30, 2024, total expenses were $23.680 million, down from $27.997 million in 2023.
| Type of Expense | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Interest Expense | $12.711 million | $14.798 million |
| Base Management Fee | $4.473 million | $5.573 million |
| Incentive Fee | $3.159 million | $3.866 million |
| Professional Fees | $1.219 million | $1.262 million |
| Administration Fee | $1.184 million | $1.302 million |
| Other Expenses | $0.934 million | $1.196 million |
Net Investment Income
For the nine months ended September 30, 2024, the net investment income was $12.636 million, a decrease from $15.463 million in 2023. The net investment income per common share was $0.94 in 2024, compared to $1.15 in 2023.
Market Performance and NAV
The net asset value (NAV) per share as of September 30, 2024, was $11.29, down from $12.09 at the beginning of the year. The market value per share was $8.45 as of the same date, reflecting a significant discount to NAV.
Distributions
OFS Capital Corporation has a policy of paying quarterly distributions to its shareholders. The total distributions declared during the nine months ended September 30, 2024, were $1.02 per share, totaling $13.666 million.
Debt Financing and Capital Structure
As of September 30, 2024, OFS Capital had outstanding debt of $69.1 million under its BNP Facility, which matures in 2027. The company also had $180.0 million in unsecured notes, with $125.0 million maturing in 2026. The effective interest rate on the BNP Facility was 8.78%.
Investment Portfolio
The investment portfolio is diversified across various types of debt and equity instruments. As of September 30, 2024, the portfolio consisted of:
| Investment Type | Principal Amount | Fair Value | Percent of Net Assets |
|---|---|---|---|
| First Lien Debt | $186.831 million | $186.831 million | 45.5% |
| Second Lien Debt | $48.429 million | $48.429 million | 11.5% |
| Subordinated Debt | $0 million | $0 million | 0% |
| Preferred Equity | $13.240 million | $13.240 million | 3.2% |
| Common Equity, Warrants, and Other | $76.689 million | $76.689 million | 18.4% |
| Structured Finance Securities | $79.045 million | $79.045 million | 19.0% |
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Article updated on 8 Nov 2024
Resources:
- OFS Capital Corporation (OFS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of OFS Capital Corporation (OFS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View OFS Capital Corporation (OFS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.