OFS Capital Corp. Files 10-Q for Period Ending March 31, 2024

TL;DR

<b>OFS Capital Corp. filed its Q1 2024 10-Q, detailing a slight decrease in investments and a significant debt load.</b>

AI Summary

OFS Capital Corp (OFSSO) filed a Quarterly Report (10-Q) with the SEC on May 3, 2024. OFS Capital Corp. reported its financial results for the quarter ended March 31, 2024. The company's investments in unaffiliated issuers totaled $546,578,000 as of March 31, 2024, a decrease from $563,236,000 as of December 31, 2023. Investments in affiliated non-controlled issuers were $168,992,000 as of March 31, 2024, down from $171,501,000 at the end of 2023. Total debt, including unsecured debt and notes payable, stood at $369,871,000 as of March 31, 2024. The filing details various debt instruments and investments, including specific entities like 24 Seven Holdco, LLC and Advantage Sales & Marketing Inc.

Why It Matters

For investors and stakeholders tracking OFS Capital Corp, this filing contains several important signals. The filing provides a snapshot of OFS Capital Corp.'s investment portfolio and debt structure as of the end of the first quarter of 2024, crucial for understanding its financial health and risk exposure. Specific details on investments in both affiliated and unaffiliated entities, along with breakdowns of debt obligations, offer insights into the company's operational strategy and leverage.

Risk Assessment

Risk Level: medium — OFS Capital Corp shows moderate risk based on this filing. The company holds a substantial amount of debt ($369,871,000 as of March 31, 2024), which, combined with its investment portfolio, presents a medium level of financial risk.

Analyst Insight

Investors should monitor OFS Capital Corp.'s debt levels and the performance of its investment portfolio in upcoming filings to assess its financial stability.

Key Numbers

• 546,578,000 — Investments in Unaffiliated Issuers (As of March 31, 2024.)
• 168,992,000 — Investments in Affiliated Non-Controlled Issuers (As of March 31, 2024.)
• 369,871,000 — Total Debt (As of March 31, 2024.)
• 2024-03-31 — Reporting Period End Date (For the 10-Q filing.)

Key Players & Entities

• OFS Capital Corp. (company) — Filer of the 10-Q report.
• 2024-03-31 (date) — End of the reporting period.
• $546,578,000 (dollar_amount) — Total investments in unaffiliated issuers as of March 31, 2024.
• $563,236,000 (dollar_amount) — Total investments in unaffiliated issuers as of December 31, 2023.
• $168,992,000 (dollar_amount) — Investments in affiliated non-controlled issuers as of March 31, 2024.
• $171,501,000 (dollar_amount) — Investments in affiliated non-controlled issuers as of December 31, 2023.
• $369,871,000 (dollar_amount) — Total debt as of March 31, 2024.
• 24 Seven Holdco, LLC (company) — An entity with First Lien Debt listed.

FAQ

Risk Factors

• Debt Obligations [medium — financial]: The company carries significant debt, including unsecured debt and notes payable, which could impact its financial flexibility and profitability.
• Investment Portfolio Performance [medium — market]: The value of the company's investments in unaffiliated and affiliated issuers is subject to market fluctuations and economic conditions.

Key Financial Figures

• $0.01 — ange on which registered Common Stock, $0.01 par value per share OFS The Nasdaq Glob
• $150,000,000 — in an aggregate principal amount up to $150,000,000 issued pursuant to a Revolving Credit a
• $25,000,000 — in an aggregate principal amount up to $25,000,000 CLO Collateralized loan obligation Co
• $125.0 million — d Notes Due February 2026 The Company's $125.0 million aggregate principal amount of 4.75% not
• $55.0 million — ed Notes Due October 2028 The Company's $55.0 million aggregate principal amount of 4.95% not

Filing Documents

• ofs-20240331.htm (10-Q) — 4076KB
• ofs2024q1ex311.htm (EX-31.1) — 11KB
• ofs2024q1ex312.htm (EX-31.2) — 11KB
• ofs2024q1ex321.htm (EX-32.1) — 6KB
• ofs2024q1ex322.htm (EX-32.2) — 6KB
• 0001487918-24-000043.txt (&nbsp;) — 16456KB
• ofs-20240331.xsd (EX-101.SCH) — 59KB
• ofs-20240331_cal.xml (EX-101.CAL) — 49KB
• ofs-20240331_def.xml (EX-101.DEF) — 418KB
• ofs-20240331_lab.xml (EX-101.LAB) — 598KB
• ofs-20240331_pre.xml (EX-101.PRE) — 500KB
• ofs-20240331_htm.xml (XML) — 3642KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements Consolidated Statements of Assets and Liabilities as of March 3 1 , 202 4 (unaudited) and December 31, 202 3 3 Consolidated Statements of Operations for the Three Months Ended Mar ch 3 1 , 202 4 (unaudited) and 202 3 (unaudited) 4 Consolidated Statements of Changes in Net Assets for the Three Months Ended March 3 1 , 202 4 (unaudited) and 202 3 (unaudited) 5 Consolidated Statements of Cash Flows for the Three Months Ended Mar ch 3 1 , 202 4 (unaudited) and 202 3 (unaudited) 6 Consolidated Schedules of Investments as of March 3 1 , 202 4 (unaudited) and December 31, 202 3 7

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 28 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 48 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 62 Item 4.

Controls and Procedures

Controls and Procedures 63

OTHER INFORMATION

PART II. OTHER INFORMATION 64 Item 1.

Legal Proceedings

Legal Proceedings 64 Item 1A.

Risk Factors

Risk Factors 64 Item 2 Unregistered Sales of Equity Securities and Use of Proceed s 64 Item 3. Defaults Upon Senior Securities 64 Item 4. Mine Safety Disclosures 64 Item 5. Other Information 65 Item 6. Exhibits 66

SIGNATURES

SIGNATURES 67 OFS, OFS Capital, OFS Credit and HPCI are registered trademarks of Orchard First Source Asset Management, LLC. OFS Capital Management is a trademark of Orchard First Source Asset Management, LLC. All other trademarks or trade names referred to in this Quarterly Report on Form 10-Q are the property of their respective owners. Defined Terms We have used "we," "us," "our," "our company" and "the Company" to refer to OFS Capital Corporation in this report. We also have used several other terms in this report, which are explained or defined below: Term Explanation or Definition 1940 Act Investment Company Act of 1940, as amended Adjusted NII A financial measure calculated and presented on a basis other than in accordance with GAAP and represents net investment income excluding the capital gains incentive fee Administration Agreement Administration Agreement between the Company and OFS Services dated November 7, 2012 Affiliated Account An account, other than the Company, managed by OFS Advisor or an affiliate of OFS Advisor Affiliated Fund Certain other funds, including other BDCs and registered investment companies managed by OFS Advisor or by registered investment advisers controlling, controlled by, or under common control with, OFS Advisor ASC Accounting Standards Codification, as issued by the FASB BDC Business Development Company under the 1940 Act BLA Business Loan Agreement, as amended, with Banc of California, as lender, which provides the Company with a senior secured revolving credit facility BNP Facility A secured revolving credit facility, as amended, that provides for borrowings in an aggregate principal amount up to $150,000,000 issued pursuant to a Revolving Credit and Security Agreement, as amended, by and among OFSCC-FS, the lenders from time to time parties thereto, BNP Paribas, as administrative agent, OFSCC-FS Holdings, LLC, a wholly owned subsidiary of the Company, as equityholder, the Company, as servicer, Citibank,

Forward-Looking Statements

Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. 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", "believes", "seeks", "estimates", "would", "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 without limitation: our ability and experience operating a BDC or maintaining our tax treatment as a RIC under Subchapter M of the Code; our dependence on key personnel; our ability to maintain or develop referral relationships; our ability to replicate historical results; the ability of OFS Advisor to identify, invest in and monitor companies that meet our investment criteria; the belief that the carrying amounts of our financial instruments, such as cash, cash equivalents, receivables and payables approximate the fair value of such items due to the short maturity of such instruments and that such financial instruments are held with high credit quality institutions to mitigate the risk of loss due to credit risk; actual and potential conflicts of interest with OFS Advisor and other affiliates of OFSAM Holdings; constraint on investment due to access to material nonpublic information; restrictions on our ability to enter into transactions with our affiliates; the use of borrowed money to finance a portion of our investments; our ab

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Consolidated Financial Statements

Item 1. Consolidated Financial Statements OFS Capital Corporation and Subsidiaries Consolidated Statements of Assets and Liabilities (Dollar amounts in thousands, except per share data) March 31, 2024 December 31, 2023 (unaudited) Assets Investments, at fair value: Non-control/non-affiliate investments (amortized cost of $ 380,251 and $ 384,339 , respectively) $ 326,322 $ 333,456 Affiliate investments (amortized cost of $ 18,786 and $ 19,191 , respectively) 74,092 86,831 Total investments, at fair value (amortized cost of $ 399,037 and $ 403,530 , respectively) 400,414 420,287 Cash and cash equivalents 6,092 45,349 Interest receivable 2,532 2,217 Prepaid expenses and other assets 1,431 1,965 Total assets $ 410,469 $ 469,818 Liabilities Revolving lines of credit $ 78,500 $ 90,500 SBA debentures (net of deferred debt issuance costs of $ 0 and $ 20 , respectively) — 31,900 Unsecured Notes (net of deferred debt issuance costs of $ 2,423 and $ 2,667 , respectively) 177,577 177,333 Interest payable 1,905 3,712 Payable to adviser and affiliates (Note 3) 3,380 3,556 Accrued professional fees 438 500 Other liabilities 269 313 Total liabilities 262,069 307,814 Commitments and contingencies (Note 6) Net assets Preferred stock, par value of $ 0.01 per share, 2,000,000 shares authorized, - 0 - shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively $ — $ — Common stock, par value of $ 0.01 per share, 100,000,000 shares authorized, 13,398,078 and 13,398,078 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively 134 134 Paid-in capital in excess of par 184,841 184,841 Total accumulated losses ( 36,575 ) ( 22,971 ) Total net assets 148,400 162,004 Total liabilities and net assets $ 410,469 $ 469,818 Number of shares outstanding 13,398,078 13,398,078 Net asset value per share $ 11.08 $ 12.09 See Notes to Consolidated Financial Statements (unaudited). 3 OFS Capital Co

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View this 10-Q filing on SEC EDGAR