OFS Credit Company Announces Financial Results for the Fourth Fiscal Quarter 2024

CHICAGO--(BUSINESS WIRE)--December 11, 2024-- 

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 October 31, 2024.

FOURTH QUARTER HIGHLIGHTS

   -- 
 Net investment income ("NII") of $4.5 million, or $0.24 per common 
      share, for the fiscal quarter ended October 31, 2024. This compares to 
      NII of $3.9 million, or $0.24 per common share, for the fiscal quarter 
      ended July 31, 2024. During the fiscal quarter ended October 31, 2024, 
      NII increased by $0.6 million while NII per common share remained stable 
      at $0.24 due to an increase in the weighted-average outstanding shares 
      from At-the-Market share sales during the quarter. See additional 
      information under "Results of Operations" below. 
 
 
   -- 
 Core net investment income ("Core NII")1 of $10.7 million, or $0.57 per 
      common share, for the fiscal quarter ended October 31, 2024. This 
      compares to Core NII of $7.6 million, or $0.47 per common share, for the 
      fiscal quarter ended July 31, 2024. For the fiscal quarter ended October 
      31, 2024, recurring waterfall payments from CLO equity investments 
      increased to $13.0 million from $9.6 million in the prior quarter, 
      primarily attributable to an increase in issuers making their first 
      payment since origination. 
 
 
   -- 
 Net asset value ("NAV") per common share of $7.18 as of October 31, 
      2024, a decrease of $0.06 from NAV of $7.24 as of July 31, 2024. 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 $0.24 
      per common share. 
 
 
   -- 
 During the fiscal quarter ended October 31, 2024, the interest income 
      yield2 of our investment portfolio, based on average amortized cost, was 
      14.49%. 
 
 
   -- 
 During the fiscal quarter ended October 31, 2024, we issued 3,850,322 
      shares of common stock through our At-the-Market offering, for net 
      proceeds of $27.9 million, after deducting commissions, fees and offering 
      costs. 
 

OTHER RECENT EVENTS

   -- 
 As previously announced, on October 28, 2024, our board of directors 
      (the "Board") declared monthly cash distributions of $0.115 per common 
      share for each of the three months in the quarter ending January 31, 
      2025, which implied an annualized cash distribution rate of 19.5% based 
      on the closing market price of $7.07 per common share on October 31, 
      2024. See additional information under "Distributions" below. 
 
 
   -- 
 In October 2024, we issued 1,196,000 shares of our 7.875% Series F Term 
      Preferred Stock for net proceeds of $28.8 million, after deducting 
      underwriting costs and offering expenses. As of October 31, 2024, our 
      debt-to-equity ratio was 0.61x3, which remains within our target leverage 
      ratio of 0.50x-to-0.67x. 
 
 
SELECTED FINANCIAL 
HIGHLIGHTS 
(in millions, except 
per share data) 
                        As of October 31, 2024     As of July 31, 2024 
                       ------------------------  ----------------------- 
Investment portfolio, 
 at fair value            $               214.9     $            161.1 
NAV per common share                       7.18                   7.24 
 
 
                                      For the Fiscal Quarter Ended 
                               ------------------------------------------- 
(Per common share)                 October 31, 2024        July 31, 2024 
                               ------------------------  ----------------- 
Net investment income             $            0.24       $        0.24 
Net realized loss on 
 investments                                  (0.24)              (0.37) 
Net unrealized appreciation 
 on investments                                0.28                0.35 
                               ----  --------------          ---------- 
Net earnings                      $            0.28       $        0.22 
                               ----  --------------          ---------- 
 
Reconciliation of Core NII 
-- Non-GAAP(1) 
Net investment income             $            0.24       $        0.24 
CLO equity adjustments                         0.33                0.23 
                               ----  --------------          ---------- 
Core NII                          $            0.57       $        0.47 
                               ====  ==============          ========== 
 

(1) 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.

(2) 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).

(3) Debt-to-equity ratio is calculated as the total principal of outstanding preferred stock divided by total net assets.

MANAGEMENT COMMENTARY

"During the fourth quarter, we deployed $81.1 million of capital in CLO equity and warehouse investment opportunities that we expect will deliver attractive yields," said Bilal Rashid, Chief Executive Officer. "We believe that our ability to utilize the capital markets to raise additional capital of $56.7 million helped grow our investment portfolio and increase its weighted-average remaining reinvestment period to 3.1 years as of October 31, 2024."

PORTFOLIO AND INVESTMENT ACTIVITIES

As of October 31, 2024, the total fair value of our investment portfolio was $214.9 million, which was equal to 84.3% of amortized cost. For the quarter ended October 31, 2024, our CLO equity cash flow yield(4) was 25.78% based on amortized cost.

 
Portfolio Overview 
($ in millions)          As of October 31, 2024      As of July 31, 2024 
--------------------   --------------------------  ----------------------- 
Investment portfolio, 
 at fair value           $           214.9           $         161.1 
Total number of 
 issuers                                77                        72 
Weighted-average 
 effective yield(5)                  14.30%                    12.71% 
 

(4) 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.

(5) Based on amortized cost at period end; excludes discount accretion on CLO debt investments.

 
                                      For the Fiscal Quarter Ended 
                               ------------------------------------------- 
Portfolio Purchase Activity 
($ in millions)                    October 31, 2024        July 31, 2024 
----------------------------   ------------------------  ----------------- 
CLO equity investments           $          72.4          $       8.8 
Loan accumulation facility 
 investments                                 8.6                  3.1 
Other CLO equity-related 
 investments (fee rebates)                   0.1                  0.2 
                               ---  ------------  -----      --------  --- 
Total investments                $          81.1          $      12.1 
                               ---  ------------  -----      --------  --- 
Weighted-average effective 
 yield - period end                        19.05%               20.03% 
 
 
                                            As of October 31, 2024 
                                      ---------------------------------- 
Portfolio Composition ($ in 
millions)                               Amortized Cost      Fair Value 
-----------------------------------   ------------------  -------------- 
CLO equity investments                   $         228.5   $     186.7 
CLO debt investments                                19.7          21.1 
Loan accumulation facility 
 investments                                         5.5           5.5 
Other CLO equity-related investments 
 (fee rebates)                                       1.2           1.6 
                                      ----  ------------      -------- 
Total investments                        $         254.9   $     214.9 
                                      ----  ------------      -------- 
 

RESULTS OF OPERATIONS

Interest Income

During the fiscal quarter ended October 31, 2024, interest income increased by $1.1 million to $8.6 million compared to $7.5 million for the prior quarter. The increase in interest income was primarily due to net investment deployment of $58.9 million, as well as certain non-recurring income related to loan accumulation facility and CLO debt investment repayments.

Expenses

During the fiscal quarter ended October 31, 2024, total expenses increased by $0.5 million to $4.1 million, primarily due to an aggregate net increase of $0.4 million in base management and incentive fees, attributed to a higher total equity base and NII, as well as $0.2 million in interest expenses related to the issuance of our 7.875% Series F Term Preferred Stock in October 2024.

Net Realized and Unrealized Gain (Loss) on Investments

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December 11, 2024 08:00 ET (13:00 GMT)