OFS Credit Company Announces Third Quarter 2019 Net Asset Value and Selected Financial Results
HIGHLIGHTS
-
Net investment income ("NII") of
$1.15 million , or$0.46 per common share for the fiscal quarter endedJuly 31, 2019 . -
Core net investment income ("Core NII")1 of
$2.17 million , or$0.87 per common share, which approximated 174% of our distributions for the fiscal quarter endedJuly 31, 2019 . -
Net asset value of
$17.44 per common share as ofJuly 31, 2019 , a decrease from$18.95 as ofApril 30, 2019 . -
Closed investments totaling approximately
$3.32 million during the fiscal quarter endedJuly 31, 2019 . -
The weighted average GAAP (as defined below) effective yield of our CLO equity investments at current cost was 14.76% as of
July 31, 2019 . -
Declared monthly distributions on common shares through
October 2019 of$0.167 per share, implying an annualized distribution of$2.00 per share.
Management Commentary
“Our net investment income increased from the prior quarter as we deployed the proceeds from our preferred stock offering. Our net asset value declined from the prior quarter due to unrealized depreciation of the portfolio, resulting from declines in the broadly syndicated loan market.”
“We believe we have balance sheet capacity to continue to grow our portfolio and net investment income and we continue to see attractive investment opportunities. We believe our commitment to strong, long-term performance is aligned with the interests of
(1)Non-GAAP Financial Measure - Core NII
On a supplemental basis, we disclose Core NII, which is a financial measure calculated and presented on a basis of methodology other than in accordance with accounting principles generally accepted in
For GAAP purposes, interest income from investments in the “equity” class securities of CLO vehicles is recognized in accordance with the effective interest method, which is based on estimated cash flows to the expected redemption of the investments, and the investments' current amortized cost. The result is an effective yield for the investments which differs from the actual cash received. The effective yield is recognized as an increase to the amortized cost of the investment, and distributions received are recognized as a reduction in amortized cost basis. Accordingly, interest income recognized on CLO equity securities in the GAAP statement of operations differs from the cash distributions received by the Company during the period (referred to below as “CLO equity adjustments”).
Our measure of Core NII utilizes the interest account waterfall distributions of the underlying CLOs, determined by the underlying CLOs’ trustees in accordance with the applicable CLO indentures, in lieu of the GAAP measure of effective-yield interest income. Management believes this measure to be representative of the cash component of taxable income to be reported to us by the underlying CLOs. However, taxable income to be reported to us by the underlying CLOs may also include non-cash components—such as the amortization of premium or discounts on the underlying CLOs’ investments in commercial loans and the amortization of deferred debt issuance costs on the underlying CLOs’ debt obligations—as well as realized capital gains or losses resulting from trading activities within the underlying CLOs, which are generally retained in the principal account of (i.e., not distributed by) the underlying CLOs; and will be impacted by tax attribute carry-over (e.g., loss carry-forwards) within the CLO vehicles. Moreover, the taxable income we recognize may also be influenced by differences between our fiscal year end and the fiscal year end of any of the CLOs in which we invest, the legal form of the CLO vehicles, and other factors.
For the Company to continue to qualify as a regulated investment company for U.S. federal income tax purposes, we are required, among other things, to distribute annually at least 90% of our investment company taxable income. Thus, management monitors Core NII as an indication of our estimated taxable income for a reporting period. We can offer no assurance that these estimates will reflect the final amount or tax character of our earnings, which cannot be determined until we receive tax reports from the underlying CLOs and prepare our tax returns following the close of our fiscal year. We also note that this non-GAAP measure may not serve as a useful indicator of taxable earnings, particularly during periods of market disruption and volatility, and, as such, our taxable income may differ materially from our Core NII.
|
Three Months Ended July 31, 2019 |
|
|
Amount |
Per Common
|
GAAP Net investment income |
$1,145,284 |
$0.46 |
CLO equity adjustments |
1,026,893 |
0.41 |
Core Net investment income |
$2,172,177 |
$0.87 |
Distributions
On
Record Date |
Payable Date |
Distribution Per Share |
||
August 23, 2019 |
|
August 30, 2019 |
|
$0.167 |
September 23, 2019 |
|
September 30, 2019 |
|
$0.167 |
October 24, 2019 |
|
October 31, 2019 |
|
$0.167 |
On
Record Date |
Payable Date |
Dividend Per Share |
||
August 23, 2019 |
|
August 30, 2019 |
|
$0.1432292 |
September 23, 2019 |
|
September 30, 2019 |
|
$0.1432292 |
October 24, 2019 |
|
October 31, 2019 |
|
$0.1432292 |
PORTFOLIO AND INVESTMENT ACTIVITIES
During the fiscal quarter ending
RESULTS OF OPERATIONS
Income
Interest Income
Interest income for the fiscal quarter ending
Expenses
Management fee
Management fee expense for the fiscal quarter ending
Incentive fee
Incentive fee expense for the fiscal quarter ending
Net Loss on Investments
Net losses for the fiscal quarter ending
LIQUIDITY AND CAPITAL RESOURCES
As of
About
Forward-Looking Statements
Statements in this press release regarding management's future expectations, beliefs, intentions, goals, strategies, plans or prospects, including statements relating to: management’s beliefs regarding the Company's balance sheet capacity to grow the Company's portfolio and net investment income; the Company's commitment to strong, long-term performance and the alignment of that performance to the ownership of the Company's common stock by affiliated parties; and other factors may constitute forward-looking statements. Forward-looking statements can be identified by terminology such as “anticipate,” “believe,” “could,” “could increase the likelihood,” “estimate,” “expect,” “intend,” “is planned,” “may,” “should,” “will,” “will enable,” “would be expected,” “look forward,” “may provide,” “would” or similar terms, variations of such terms or the negative of those terms. Such forward-looking statements involve known and unknown risks, uncertainties and other factors including those risks, uncertainties and factors referred to in documents that may be filed by
1 Registration does not imply a certain level of skill or training
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Source:
INVESTOR RELATIONS:
OFS Credit Company, Inc.
Steve Altebrando, 646-652-8473
saltebrando@ofsmanagement.com