OFS Capital Corporation Q2 FY2025 earnings call

• Net investment income was fairly stable at $0.25 per share, down from $0.26 per share in the prior quarter. - NAV at June 30 was $10.91 per share, down from $11.97 per share prior quarter, primarily due to decline in equity investments. - Working on rotating noninterest-earning equity positions into interest-earning assets, specifically exploring monetization of minority equity investment in Pfanstiehl. - Credit portfolio health remained stable with no new nonaccruals. - Macro-economic uncertainty surrounding tariffs and U.S. monetary policy impacts unclear. - Refinanced $125 million unsecured notes, completed $69 million unsecured note offering in July, intends to pay off $94 million in August. - Maintaining quarterly distribution at $0.34 per share for Q3 2025. - Net investment income top line increased $181,000 QoQ but expenses up $363,000. - Pursuing sale of minority equity position in Pfanstiehl. - $7.9 million invested in new middle market debt investment during the quarter, with $16.1 million in unfunded commitments to portfolio companies. - Weighted average performing investment income yield increased modestly to 13.6% QoQ due to new middle market loan portfolio investment.

Net investment income for the second quarter was $3.3 million or $0.25 per share, down $0.01 per share from the prior quarter. Top line income increased $181,000 quarter-over-quarter but expenses increased $363,000, causing a slight decline in net investment income. Net asset value per share decreased by approximately 9% or $1.06 primarily due to net unrealized depreciation on the investment portfolio, with equity holdings, including a $7.8 million unrealized depreciation on Pfanstiehl, being the main contributor. The investment portfolio at June 30 was composed of approximately 70% senior secured loans, 23% structured finance securities, and 7% equity securities. The loan portfolio remained stable with no new nonaccruals, and 100% of the loan portfolio was in first lien and second lien senior secured loans.

• Maintaining quarterly distribution at $0.34 per share for the third quarter of 2025. - Evaluating distribution level in light of current macroeconomic environment and new debt capital cost. - Focused on improving long-term returns while preserving capital.

• Uncertainty surrounding tariffs and U.S. monetary policy, impact on portfolio companies unclear.

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