CHICAGO--(BUSINESS WIRE)--September 12, 2025--
OFS Credit Company, Inc. (Nasdaq: OCCI) ("OFS Credit," the "Company," "we," "us" or "our"), an investment company that primarily invests in collateralized loan obligation ("CLO") equity and debt securities, today announced its financial results for the fiscal quarter ended July 31, 2025.
THIRD QUARTER HIGHLIGHTS
-- Net investment income ("NII") of $6.1 million, or $0.22 per common
share, for the fiscal quarter ended July 31, 2025. This compares to NII
of $5.2 million, or $0.21 per common share, for the fiscal quarter ended
April 30, 2025. During the fiscal quarter ended July 31, 2025, NII
increased by $0.9 million, or 17.0%, primarily due to an increase in the
size of our investment portfolio and an increase in our interest income
yield1. See additional information under "Results of Operations" below.
-- Core net investment income ("Core NII")2 of $8.5 million, or $0.31 per
common share, for the fiscal quarter ended July 31, 2025. This compares
to Core NII of $9.2 million, or $0.37 per common share, for the fiscal
quarter ended April 30, 2025. Core NII decreased for the fiscal quarter
ended July 31, 2025, primarily due to lower cash flows on our CLO equity
investments attributable to the tightening of loan spreads driven by
strong investor demand for CLOs and leveraged loans.
-- Net asset value ("NAV") per common share of $6.13 at July 31, 2025, a
decrease of $0.04 from NAV of $6.17 at April 30, 2025. This decrease in
NAV was primarily due to distributions of $0.345 per common share paid
during the quarter which exceeded our quarterly NII of $0.22 per common
share, partially offset by a net gain on investments of $0.07 per common
share. See additional information under "Results of Operations" below.
-- During the fiscal quarter ended July 31, 2025, the interest income
yield1 of our investment portfolio was 14.38%, based on average amortized
cost.
-- During the fiscal quarter ended July 31, 2025, we issued 1,538,496
shares of common stock through our At-the-Market offering, for net
proceeds of $10.0 million, after deducting commissions, fees and offering
costs.
OTHER RECENT EVENTS
-- As previously announced, on July 16, 2025, our board of directors (the
"Board") declared monthly cash distributions of $0.115 per common share
for each of the three months in the fiscal quarter ending October 31,
2025, which implies an annualized cash distribution rate of 22.9% based
on the closing market price of $6.02 per common share on July 31, 2025.
The Board also declared monthly distributions on our outstanding
preferred stock through January 31, 2026. See additional information
under "Distributions" below.
SELECTED FINANCIAL HIGHLIGHTS
(in millions, except per share
data) At
-----------------------------------
July 31, 2025 April 30, 2025
--------------- ------------------
Balance Sheet Highlights
Total investments, at fair value $ 279.4 $ 252.2
Total outstanding preferred stock -
principal 115.9 115.9
Total net assets 170.0 160.3
NAV per common share 6.13 6.17
Operating Highlights For the Fiscal Quarter Ended
-----------------------------------------
(Per common share) July 31, 2025 April 30, 2025
--------------------- ------------------
Net investment income $ 0.22 $ 0.21
Net realized loss on
investments (0.07) (0.04)
Net change in unrealized
appreciation (depreciation)
on investments 0.14 (0.67)
--- --------------- -----------
Net earnings (loss) $ 0.29 $ (0.50)
--- --------------- -----------
Reconciliation of Core NII
-- Non-GAAP(2)
Net investment income $ 0.22 $ 0.21
CLO equity adjustments 0.09 0.16
--- --------------- -----------
Core NII $ 0.31 $ 0.37
=== =============== ===========
(1) Interest income yield is calculated as total investment income earned on
the investment portfolio (excluding idle cash interest income) divided by the
average total investments at cost (annualized).
(2) 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 the United States
of America ("GAAP"). Core NII represents NII adjusted for differences in
applicable cash distributions received on our CLO equity and equity-related
investments that have not been optionally redeemed relative to income
recognized in accordance with GAAP. See additional information under
"Supplemental Information Regarding Core Net Investment Income" below.
MANAGEMENT COMMENTARY
"We had a solid third fiscal quarter highlighted by a 17.0% increase in net investment income compared to the prior quarter," said Bilal Rashid, Chief Executive Officer. "During the quarter, we raised approximately $10.0 million of additional capital through our At-the-Market common stock offering program. We deployed $41.2 million into our investment portfolio; these new investments, which carried a weighted-average effective yield of 19.05% at period end, contributed to the increase in our portfolio yield during the quarter."
PORTFOLIO AND INVESTMENT ACTIVITIES
As of July 31, 2025, the total fair value of our investment portfolio was $279.4 million, which was equal to 83.7% of amortized cost. For the quarter ended July 31, 2025, our CLO equity cash flow yield(3) was 17.48% based on amortized cost.
At
-------------------------------------
Portfolio Overview ($ in millions) July 31, 2025 April 30, 2025
---------------------------------- ----------------- ------------------
Total investments, at fair value $ 279.4 $ 252.2
Total number of issuers 89 85
Weighted-average effective yield(4) 14.04% 14.07%
(3) Calculated as CLO equity and equity-related cash distributions received
during the quarter, excluding distributions on CLO equity investments that
have been optionally redeemed, divided by average CLO equity and
equity-related investments at amortized cost.
(4) Based on amortized cost at period end; excludes discount accretion on CLO
debt investments.
For the Fiscal Quarter Ended
-------------------------------------------
Portfolio Purchases ($ in
millions) July 31, 2025 April 30, 2025
---------------------------- ----------------------- ------------------
CLO equity investments $ 36.8 $ 39.5
CLO debt investments 2.0 --
Loan accumulation facility
investments 2.2 2.2
Other CLO equity-related
investments (i.e., fee
rebates) 0.2 0.2
--- ----------- ----- --------- ---
Total investments $ 41.2 $ 41.9
--- ----------- ----- --------- ---
Weighted-average effective
yield - period end 19.05% 20.96%
At July 31, 2025
--------------------------------
Portfolio Composition ($ in millions) Amortized Cost Fair Value
------------------------------------- ---------------- --------------
CLO equity investments $ 311.8 $ 256.1
CLO debt investments 14.6 15.3
Loan accumulation facility investments 6.0 6.0
Other CLO equity-related investments
(i.e., fee rebates) 1.5 2.0
--- ----------- --------
Total investments $ 333.9 $ 279.4
--- ----------- --------
RESULTS OF OPERATIONS
Interest Income
During the fiscal quarter ended July 31, 2025, interest income increased to $11.9 million from $10.2 million during the prior quarter. The increase in interest income was primarily due to net investment deployment (purchases, net of sales and repayments) of $27.6 million and a 0.34% increase in the interest income yield of our investment portfolio as compared to the prior quarter.
Expenses
During the fiscal quarter ended July 31, 2025, total expenses increased by $0.8 million to $5.8 million, primarily due to a $0.4 million increase in interest expense related to a full quarter of expense on our 8.00% Series G Term Preferred Stock due 2030 and a $0.3 million aggregate increase in base management and incentive fees due to portfolio growth.
Net Realized and Unrealized Gain (Loss) on Investments
During the fiscal quarter ended July 31, 2025, net gain on investments of $1.9 million was primarily due to net unrealized appreciation on our CLO equity investments, attributable to the tightening of CLO spread levels coupled with an increase in underlying collateral loan prices during the quarter.
DISTRIBUTIONS
Fourth Fiscal Quarter 2025 Common Stock Distributions
The following schedule applies to distributions for common stockholders of record on the close of business of each specific record date:
Cash
Distribution
Month Record Date Payment Date Per Share
--------------- ---------------- ----------------- ---------------
August 2025 August 15, 2025 August 29, 2025 $0.115
September 15, September 30,
September 2025 2025 2025 $0.115
October 2025 October 15, 2025 October 31, 2025 $0.115
Dividend Reinvestment Plan ("DRIP") -- DRIP Shares Issued at 95% of Market Price
Common stockholders who participate in our DRIP have the opportunity to receive a 5% discount to the market price per share of common stock at the close of regular trading on The Nasdaq Capital Market on the valuation date fixed by the Board for each distribution (i.e., the payment date).
Common stockholders that are interested in participating in our DRIP should contact their broker or financial intermediary.
Additional information about our DRIP and how to participate can be found at https://ir.ofscreditcompany.com/shareholder-services/dividend-reinvestment-plan. We make our website content available for informational purposes only. It should not be relied upon for investment purposes, nor is it incorporated by reference into this press release.
Preferred Stock Distributions
The following schedule applies to distributions for preferred stockholders of record on the close of business of each specific record date:
Cash
Preferred Stock Distribution
Series Month Record Date Payment Date Per Share
---------------- -------------- ------------- -------------- -------------
6.125% Series C
Term Preferred
Stock (Nasdaq: August 15, August 29,
OCCIO) August 2025 2025 2025 $0.1276042
September 15,
September 2025 2025 September 30, 2025 $0.1276042
October 15,
October 2025 2025 October 31, 2025 $0.1276042
November 17,
November 2025 2025 November 28, 2025 $0.1276042
December 12,
December 2025 2025 December 31, 2025 $0.1276042
January 15,
January 2026 2026 January 30, 2026 $0.1276042
6.00% Series D
Term Preferred August 15, August 29,
Stock August 2025 2025 2025 $0.125
September 15,
September 2025 2025 September 30, 2025 $0.125
October 15,
October 2025 2025 October 31, 2025 $0.125
November 17,
November 2025 2025 November 28, 2025 $0.125
December 12,
December 2025 2025 December 31, 2025 $0.125
January 15,
January 2026 2026 January 30, 2026 $0.125
5.25% Series E
Term Preferred
Stock (Nasdaq: August 15, August 29,
OCCIN) August 2025 2025 2025 $0.109375
September 15,
September 2025 2025 September 30, 2025 $0.109375
October 15,
October 2025 2025 October 31, 2025 $0.109375
November 17,
November 2025 2025 November 28, 2025 $0.109375
December 12,
December 2025 2025 December 31, 2025 $0.109375
January 15,
January 2026 2026 January 30, 2026 $0.109375
7.875% Series F
Term Preferred
Stock (Nasdaq: August 15, August 29,
OCCIM) August 2025 2025 2025 $0.1640625
September 15,
September 2025 2025 September 30, 2025 $0.1640625
October 15,
October 2025 2025 October 31, 2025 $0.1640625
November 17,
November 2025 2025 November 28, 2025 $0.1640625
December 12,
December 2025 2025 December 31, 2025 $0.1640625
January 15,
January 2026 2026 January 30, 2026 $0.1640625
8.00% Series G
Term Preferred August 15, August 29,
Stock August 2025 2025 2025 $0.16666667
September 15,
September 2025 2025 September 30, 2025 $0.16666667
October 15,
October 2025 2025 October 31, 2025 $0.16666667
November 17,
November 2025 2025 November 28, 2025 $0.16666667
December 12,
December 2025 2025 December 31, 2025 $0.16666667
January 15,
January 2026 2026 January 30, 2026 $0.16666667
OFS Credit Company, Inc.
Statement of Assets and Liabilities
(Unaudited)
As of July 31, 2025
-----------------------
Assets:
Investments, at fair value (amortized cost of
$333,925,279) $ 279,413,462
Cash and cash equivalents 7,332,005
Interest receivable 345,365
Other assets 313,117
----------------
Total assets 287,403,949
================
Liabilities:
Preferred stock (net of deferred issuance costs of
$2,188,193) 113,711,807
Payable to adviser and affiliates 3,420,647
Other liabilities 242,000
----------------
Total liabilities 117,374,454
----------------
Net assets $ 170,029,495
================
Net assets consist of:
Common stock, par value of $0.001 per share;
90,000,000 shares authorized and 27,716,012 shares
issued and outstanding $ 27,716
Paid-in capital in excess of par 241,806,374
Total accumulated losses (71,804,595)
----------------
Total net assets $ 170,029,495
================
Net asset value per common share $ 6.13
OFS Credit Company, Inc.
Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
July 31, 2025 July 31, 2025
-------------------- ---------------------
Investment income:
Interest income $ 11,875,174 $ 32,177,892
Operating expenses:
Interest expense 2,148,056 5,544,385
Incentive fees 1,512,696 4,093,485
Base management fees 1,263,086 3,609,133
Administration fees 402,998 1,086,561
Professional fees 270,419 791,537
Other expenses 227,136 678,850
--------------- --------------
Total operating expenses 5,824,391 15,803,951
--------------- --------------
Net investment income 6,050,783 16,373,941
--------------- --------------
Net realized and unrealized
gain (loss) on investments:
Net realized loss on
investments (1,934,404) (2,775,095)
Net change in unrealized
appreciation
(depreciation) on
investments 3,813,971 (14,443,821)
--------------- --------------
Net gain (loss) on
investments 1,879,567 (17,218,916)
--------------- --------------
Net increase (decrease) in
net assets resulting from
operations $ 7,930,350 $ (844,975)
=============== ==============
Weighted-average common
shares outstanding 27,179,615 24,785,225
About OFS Credit Company, Inc.
OFS Credit is a non-diversified, externally managed closed-end management investment company. The Company's primary investment objective is to generate current income, with a secondary objective to generate capital appreciation, which we seek to achieve primarily through investments in CLO equity and debt securities. The Company's investment activities are managed by OFS Capital Management, LLC, an investment adviser registered under the Investment Advisers Act of 1940(5) , as amended, and headquartered in Chicago with additional offices in New York and Los Angeles.
(5) Registration does not imply a certain level of skill or training
Forward-Looking Statements
Statements in this press release regarding management's future expectations, beliefs, intentions, goals, strategies, plans or prospects, including statements relating to: the Company's results of operations, including NII, Core NII, earnings per share and net asset value and the factors that may affect such results; and other factors may constitute forward-looking statements. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as "anticipates," "expects," "intends," "plans," "will," "may, " "continue," "believes," "seeks," "estimates," "would," "could," "should," "targets," "projects," and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including those risks, uncertainties and factors referred to in documents that may be filed by OFS Credit from time to time with the Securities and Exchange Commission ("SEC"), such as interest rate and inflation rate changes, the ongoing war between Russia and Ukraine, the escalated armed conflict and heightened regional tensions in the Middle East, the agenda of the U.S. presidential administration, including the impact of tariff enactment and tax reductions, trade disputes with other countries, instability in the U.S. and international banking systems, the risk of recession or a shutdown of U.S government services and related market volatility, on our business, our portfolio companies, our industry and the global economy. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and, as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this press release should not be regarded as a representation by us that our plans and objectives will be achieved. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this press release. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including Annual and Semi-Annual Reports on Form N-CSR and monthly portfolio investments reports filed on Form N-PORT for the third month of each of our fiscal quarters.
Supplemental Information Regarding Core Net Investment Income
We provide information relating to Core NII (a non-GAAP measure) on a supplemental basis. This measure is not provided as a substitute for GAAP NII, but in addition to it. Our non-GAAP measures may differ from similar measures by other companies, even if similar terms are used to identify such measures. Core NII represents GAAP NII adjusted for differences in applicable cash distributions received on our CLO equity and equity-related investments that have not been optionally redeemed relative to income recognized in accordance with GAAP. OFS Capital Management, LLC, our investment adviser, uses this information in its internal analysis of results and believes that this information may be informative in gauging the quality of the Company's financial performance, identifying trends in its results, and providing meaningful period-to-period comparisons.
Income from investments in the "equity" class securities of CLO vehicles, for GAAP purposes, is recorded using the effective interest method; this is based on an estimated effective yield, at current amortized cost, to the expected redemption of the security utilizing assumed cash flows, including those CLO equity investments that have not made their inaugural distribution for the relevant period end. The result is an estimated effective yield for the investment in which the respective investment's cost basis is adjusted quarterly based on the difference between the actual cash received, or distributions entitled to be received, and the income recognized via the estimated effective yield calculation. Accordingly, investment income recognized on CLO equity and equity-related securities in the GAAP statement of operations differs from the cash distributions actually received by the Company during the period (referred to below as "CLO equity adjustments"). Therefore, management believes that Core NII may provide a useful indicator of distributable operating income, as this reflects a measure of potential cash availability, net of operating expenses, that could be utilized to cover distributions to common stockholders. We note that this non-GAAP measure has no bearing on the tax character of the common stock distributions made during the period, and future distributions are not guaranteed. A portion of current and future common stock distributions may consist of a return of capital for tax purposes. The actual tax character of our earnings cannot be finally determined until our tax return is prepared after the close of our taxable year.
The following table provides a reconciliation of GAAP NII to Core NII for the fiscal quarters ended July 31, 2025 and April 30, 2025:
For the Fiscal Quarter For the Fiscal Quarter
Ended July 31, 2025 Ended April 30, 2025
-------------------------- ---------------------------
Per Common Per Common
Share Share
Amount Amount Amount Amount
------------- ----------- ------------- ------------
Net
investment
income $ 6,050,783 $ 0.22 $ 5,172,411 $ 0.21
CLO equity
adjustments 2,476,308 0.09 4,049,003 0.16
--------- ------- --------- --- -------
Core NII $ 8,527,091 $ 0.31 $ 9,221,414 $ 0.37
========= ======= ========= === =======
The following table provides a reconciliation of GAAP NII to Core NII for the nine months ended July 31, 2025 and 2024:
For the Nine Months Ended For the Nine Months Ended
July 31, 2025 July 31, 2024
-------------------------- ---------------------------
Per Common Per Common
Share Share
Amount Amount Amount Amount
-------------- ---------- -------------- -----------
Net
investment
income $ 16,373,941 $ 0.66 $ 12,952,411 $ 0.81
CLO equity
adjustments 8,891,204 0.36 10,275,605 0.64
---------- ------ ---------- -------
Core NII $ 25,265,145 $ 1.02 $ 23,228,016 $ 1.45
========== ====== ========== =======
OFS$(R)$ and OFS Credit(R) are registered trademarks of Orchard First Source Asset Management, LLC.
OFS Capital Management$(TM)$ is a trademark of Orchard First Source Asset Management, LLC.
View source version on businesswire.com: https://www.businesswire.com/news/home/20250912220833/en/
CONTACT: INVESTOR RELATIONS:
Steve Altebrando
847-734-2085
investorrelations@ofscreditcompany.com
(END) Dow Jones Newswires
September 12, 2025 08:00 ET (12:00 GMT)