OFS Capital Corp Q3 FY2024 earnings call

• Net investment income increased by ~4.8% to $0.27 per share. - Focus on rotating certain non-interest earning equity positions into interest earning assets to increase net investment income long term. - Fair value of Pfanstiehl, the largest equity position, appreciated by $2.8 million to $73.7 million at quarter end. - Portfolio remains well positioned for the current macroeconomic environment, with diversification away from highly cyclical industries and loan portfolio well diversified in first-lien and second-lien senior secured loans. - Advisor managing ~$3.9 billion across loan and structured credit markets with over 25-year track record through multiple credit cycles. - Quarterly distribution remains at $0.34 per share for the fourth quarter.

The investment portfolio at fair value was comprised of approximately 71% senior secured loans, 23% structured finance securities, and 6% equity securities. Net investment income increased by approximately 4.8% to $0.27 per share. Net asset value per share decreased modestly by 1.9% to $11.29 per share. Total investment income was down approximately 2% to $10.9 million for the quarter. The weighted average performing investment income yield on the interest bearing portion of the portfolio improved slightly to 13.6%, up about 0.2% quarter-over-quarter.

• Plan to increase net investment income by exploring potential alternatives to monetize non-interest earning equity investments, primarily Pfanstiehl. - Quarterly distribution for the fourth quarter remains at $0.34 per share. - Expect M&A activity to pick up in coming quarters, which could lead to higher originations and fee income and positive impact on net investment income.

• Market risks associated with interest rate changes. - Potential impact of a recession on the loan portfolio. - Uncertainties related to the monetization of equity investments and their impact on net investment income.

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