OFS Capital Corp (OFS) 2024 Q2 法說會逐字稿

Good day, and welcome to the OFS Capital Corporation second-quarter 2024 earnings conference call. (Operator Instructions) Please note this event is being recorded.

大家好，歡迎參加 OFS Capital Corporation 2024 年第二季財報電話會議。（操作員說明）請注意此事件正在被記錄。

I would now like to turn the conference over to Steve Altebrando for opening remarks. Please go ahead.

現在我想請史蒂夫·阿爾特布蘭多 (Steve Altebrando) 致開幕詞。請繼續。

Good morning, everyone, and thank you for joining us. Also on the call today are Bilal Rashid, our Chairman and Chief Executive Officer; and Jeff Cerny, the company's Chief Financial Officer and Treasurer. Before we begin, please note that the statements made on this call and webcast may constitute forward-looking statements as defined under applicable securities laws.

大家早安，感謝您加入我們。今天參加電話會議的還有我們的董事長兼執行長 Bilal Rashid；以及公司財務長兼財務主管 Jeff Cerny。在我們開始之前，請注意，本次電話會議和網路廣播中的陳述可能構成適用證券法定義的前瞻性陳述。

Such statements reflect various assumptions, expectations, and opinions by OFS Capital management concerning anticipated results, are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from such statements. The uncertainties and other factors are in some way beyond management's control, including the risk factors described from time to time in our filings with the SEC.

此類陳述反映了OFS 資本管理部門對預期結果的各種假設、預期和意見，並非對未來業績的保證，並受到已知和未知的風險、不確定性和其他因素的影響，這些因素可能導致實際結果與此類陳述有重大差異。不確定性和其他因素在某種程度上超出了管理層的控制範圍，包括我們向 SEC 提交的文件中不時描述的風險因素。

Although we believe these assumptions are reasonable, any of those assumptions could prove inaccurate. And as a result, the forward-looking statements based on those assumptions also could be incorrect. You should not place undue reliance on these forward-looking statements. OFS Capital undertakes no duty to update any forward-looking statements made herein, and all forward-looking statements speak only as of the date of this call.

儘管我們相信這些假設是合理的，但任何這些假設都可能被證明是不準確的。因此，基於這些假設的前瞻性陳述也可能是不正確的。您不應過度依賴這些前瞻性陳述。OFS Capital 不承擔更新本文中所做的任何前瞻性陳述的義務，所有前瞻性陳述僅代表本次電話會議之日的情況。

With that, I'll turn the call over to Chairman and Chief Executive Officer, Bilal Rashid.

接下來，我會將電話轉給董事長兼執行長比拉爾‧拉希德 (Bilal Rashid)。

Thank you, Steve. Earlier this morning, we announced our second-quarter earnings. Our net asset value per share increased by 3.9% to $11.51, up $0.43 from the prior quarter. While the current interest rate environment remains uncertain, we believe that we continue to benefit from our balance sheet positioning, with 72% of our debt being fixed rate and 92% of our loan portfolio at fair value being floating rate.

謝謝你，史蒂夫。今天早些時候，我們公佈了第二季財報。我們的每股淨值成長 3.9%，達到 11.51 美元，比上一季增加 0.43 美元。儘管目前的利率環境仍然不確定，但我們相信我們將繼續受益於我們的資產負債表定位，我們的債務中有72% 是固定利率，而以公允價值計算的貸款組合中有92% 是浮動利率。

Our net investment income for the quarter decreased from $0.42 per share in the first quarter to $0.26 per share this quarter. As you recall, the net investment income from last quarter reflected certain non-recurring items, including significant non-recurring dividends from two of our equity investments. This quarter's net investment income primarily reflects the impact of our delevered balance sheet, which Jeff will discuss in more detail.

我們本季的淨投資收益從第一季的每股 0.42 美元下降到本季的每股 0.26 美元。如您所知，上季的淨投資收入反映了某些非經常性項目，包括我們兩項股權投資的重大非經常性股利。本季的淨投資收入主要反映了我們去槓桿化資產負債表的影響，傑夫將更詳細地討論這一點。

That being said, we are focused on increasing our net investment income, primarily by converting certain non-interest-earning equity positions into interest-earning assets as we mentioned on our last call. In that regard, we are continuing to explore alternatives for our minority equity investment in Pfanstiehl, our largest equity position.

話雖這麼說，我們的重點是增加淨投資收入，主​​要是透過將某些非生息股權頭寸轉換為生息資產，正如我們在上次電話會議中提到的那樣。在這方面，我們正在繼續探索對我們最大的股權頭寸 Pfanstiehl 的少數股權投資的替代方案。

The fair value of the position rebounded this quarter, appreciating by $7.8 million to $70.8 million at quarter-end. The improvement in value is, in part, attributed to an upswing in fundamental performance following a recent trough. As a reminder, this is a position we invested in more than 10 years ago at a modest cost of only $200,000. To date, we have received approximately $3.4 million in distributions or approximately 16 times our cost.

該頭寸的公允價值本季有所反彈，在季度末上漲了 780 萬美元，達到 7,080 萬美元。價值的改善部分歸因於近期低谷後基本表現的回升。提醒一下，這是我們十多年前以僅 20 萬美元的適度成本投資的職位。迄今為止，我們已收到約 340 萬美元的分配金額，約為我們成本的 16 倍。

Turning to our portfolio, we believe it is well positioned for the current macroeconomic environment. As part of our long-standing investment discipline, we remain committed to avoiding highly cyclical industries. We believe that our loan portfolio remains well diversified and defensively positioned.

談到我們的投資組合，我們相信它適合當前的宏觀經濟環境。作為我們長期投資紀律的一部分，我們仍然致力於避免高度週期性的行業。我們相信，我們的貸款組合仍然多元化且處於防禦性地位。

At quarter-end, our largest sector exposures at fair value are in manufacturing, healthcare, wholesale trade, and business services. Another key part of our investment discipline is investing higher in the capital structure, with approximately 100% of our loan portfolio at fair value and first-lien and second-lien senior secured loans.

截至季末，我們以公允價值計算最大的產業曝險是製造業、醫療保健、批發貿易和商業服務。我們投資紀律的另一個關鍵部分是加大對資本結構的投資，我們的貸款組合中約 100% 為公允價值以及第一留置權和第二留置權優先擔保貸款。

In terms of new originations, M&A activity remains subdued, though we anticipate an increase in activity later in the year as we get more clarity on interest rates. In the meantime, we remain active in supporting our existing portfolio companies.

就新發起而言，併購活動仍然低迷，但隨著我們對利率的了解更加明確，我們預計今年稍後併購活動將會增加。同時，我們仍然積極支持現有的投資組合公司。

In our view, our financing continues to benefit our company. At the end of the second quarter, 100% of our outstanding debt matures in 2026 or later, and 72% of our outstanding debt is unsecured. Our non-recourse $150 million senior loan facility with BNP Paribas matures in June 2027.

我們認為，我們的融資繼續使我們公司受益。截至第二季末，我們 100% 的未償債務將於 2026 年或更晚到期，72% 的未償債務是無擔保的。我們與法國巴黎銀行的 1.5 億美元無追索權優先貸款融資將於 2027 年 6 月到期。

Our corporate line of credit is flexible with no mark-to-market provisions. As we have discussed before, we locked in $180 million of fixed-rate unsecured debt in 2021, bearing a weighted average coupon of 4.8%, which is notably lower than current market pricing.

我們的企業信貸額度非常靈活，沒有以市價計價的規定。正如我們之前討論的，我們在 2021 年鎖定了 1.8 億美元的固定利率無擔保債務，加權平均票面利率為 4.8%，明顯低於當前市場定價。

As we navigate this market environment, we have confidence in the experience of our adviser, which manages approximately $4 billion across the known and structured credit markets, has expertise in multiple asset classes and industries, and has a more than 25-year track record through multiple credit cycles.

當我們應對這個市場環境時，我們對顧問的經驗充滿信心，該顧問在已知的結構化信貸市場管理著約40 億美元，擁有多個資產類別和行業的專業知識，並在以下方面擁有超過25 年的業績記錄：多個信貸週期。

At this point, I'll turn the call over to Jeff Cerny, our Chief Financial Officer, to give you more details and color for the quarter.

此時，我將把電話轉給我們的財務長 Jeff Cerny，為您提供本季度更多的詳細資訊和顏色。

Thanks, Bilal. Good morning, everyone. As Bilal mentioned, we posted net investment income of $0.26 per share for the second quarter, which was down from the first quarter, primarily due to two factors.

謝謝，比拉爾。大家早安。正如比拉爾所提到的，我們公佈第二季度每股淨投資收益為 0.26 美元，較第一季有所下降，主要是由於兩個因素。

First, we received certain non-recurring dividends in the first quarter from a couple of equity investments. And second, we continued to delever our balance sheet, resulting in a smaller asset base. Our GAAP leverage ratio has decreased from 1.87 times at December 31 to 1.62 times at June 30.

首先，我們在第一季從幾項股權投資中獲得了一定的非經常性股利。其次，我們繼續去槓桿化資產負債表，導致資產基礎縮小。我們的 GAAP 槓桿率已從 12 月 31 日的 1.87 倍下降至 6 月 30 日的 1.62 倍。

Our current distribution rate represents a 15.3% annualized yield based on the price of our common stock at quarter-end. We also announced that our quarterly distribution will remain at $0.34 per share for the third quarter. We are keenly focused on improving net investment income and once again exceeding our distribution rate.

根據我們季末普通股的價格，我們目前的分配率相當於 15.3% 的年化報酬率。我們也宣布第三季的季度分配將維持在每股 0.34 美元。我們專注於提高淨投資收益並再次超過我們的分配率。

As Bilal discussed, we are actively exploring alternatives to monetize some non-interest-bearing investments, specifically our minority equity stake in Pfanstiehl, to increase our net investment income. Our net asset value per share increased by approximately $0.43 this quarter.

正如 Bilal 所討論的，我們正在積極探索將一些無息投資（特別是我們在 Pfanstiehl 的少數股權）貨幣化的替代方案，以增加我們的淨投資收入。本季我們的每股淨值增加了約 0.43 美元。

This increase was primarily due to unrealized depreciation in certain segments of our investment portfolio, most notably our minority equity position in Pfanstiehl Holdings and certain CLO equity positions. We had no new non-accruals this quarter, and we believe the overall quality of the portfolio remains stable. 4.6% of our total investments at fair value were on non-accrual status at quarter's end.

這一增長主要是由於我們投資組合的某些部分的未實現折舊，最明顯的是我們在 Pfanstiehl Holdings 的少數股權和某些 CLO 股權頭寸。本季我們沒有新的非應計項目，我們相信投資組合的整體品質保持穩定。截至季末，我們以公允價值計算的總投資中有 4.6% 處於非應計狀態。

Turning to the income statement, total investment income was down approximately $3.1 million to $11.2 million this quarter. This was largely due to the factors I previously mentioned, including the non-recurring dividends of approximately $2.4 million received in the first quarter as well as the smaller asset base driven by repayments as we delevered the balance sheet. Our regulatory asset coverage ratio stands at 162% at quarter-end.

轉向損益表，本季總投資收入下降約 310 萬美元至 1,120 萬美元。這主要是由於我之前提到的因素，包括第一季收到的約240萬美元的非經常性股息，以及由於我們去槓桿化資產負債表而導致的還款導致的資產基礎較小。截至季末，我們的監管資產覆蓋率為 162%。

Total expenses were down 10.5% during the period to $7.7 million, primarily due to a decrease in interest expense related to our lower average outstanding debt balances from delevering activities I just mentioned, as well as the result in lower base management and incentive fees. As I mentioned, net investment income was $0.26 per share for the second quarter.

在此期間，總費用下降了10.5%，至770 萬美元，主要是由於我剛才提到的去槓桿化活動導致平均未償債務餘額下降，導致利息費用減少，以及基礎管理費和激勵費下降。正如我所提到的，第二季的淨投資收益為每股 0.26 美元。

In addition to our intentions to increase net investment income, we believe that our balance sheet positioning was beneficial this quarter given that 92% of our loan portfolio at fair value is floating rate, while approximately 72% of our outstanding debt is fixed rate. It is also worth noting that at quarter-end, all of our outstanding debt matures in 2026 or later, and approximately 72% of our outstanding debt was unsecured.

除了我們打算增加淨投資收入外，我們認為本季我們的資產負債表定位是有利的，因為我們以公允價值計算的貸款組合中有92% 是浮動利率，而我們的未償債務中約72 % 是固定利率。另外值得注意的是，截至季末，我們所有未償債務均在 2026 年或之後到期，且約 72% 的未償債務是無擔保的。

Turning to our investments, we believe the overall performance of our portfolio companies remains relatively stable compared to last quarter despite this uncertain macroeconomic environment. We are committed to being senior in the capital structure and selective in our underwriting.

談到我們的投資，我們認為，儘管宏觀經濟環境存在不確定性，但與上季相比，我們投資組合公司的整體表現仍相對穩定。我們致力於在資本結構方面保持資深，並在核保方面具有選擇性。

We remain cautious about new originations, and M&A activity remains slow. We continue to work with our portfolio companies as they identify add-on opportunities for growth. As of June 30, we had $8.9 million in commitments under various credit facilities to fund investments to our portfolio companies.

我們對新產品仍持謹慎態度，併購活動依然緩慢。我們將繼續與我們的投資組合公司合作，幫助他們尋找額外的成長機會。截至 6 月 30 日，我們在各種信貸安排下承諾提供 890 萬美元，為我們的投資組合公司的投資提供資金。

The majority of our investments are in loans, and approximately 100% of our loan portfolio at fair value was senior secured as of June 30. Based on amortized cost as of quarter-end, our investment portfolio was comprised of approximately 69% senior secured loans, 1% subordinated debt, 23% structured finance securities, and 7% equity securities.

我們的投資大多是貸款，截至 6 月 30 日，我們以公允價值計算的貸款組合中約 100% 是有優先擔保的。根據截至季末的攤餘成本，我們的投資組合由約 69% 的優先擔保貸款、1% 的次級債務、23% 的結構性融資證券和 7% 的股本證券組成。

At the end of the quarter, we had investments in 68 unique issuers totaling $398.2 million on a fair value basis. The weighted average performing investment income yield on the interest-bearing portion of the portfolio improved slightly to 13.4%, which is up about 0.4% quarter over quarter. This includes all interest prepayment fees and amortization of deferred loan fees.

截至本季末，我們對 68 個獨特發行人的投資以公允價值計算總計達 3.982 億美元。投資組合計息部分的加權平均表現投資收益收益率小幅改善至13.4%，較上季上升約0.4%。這包括所有利息預付費用和遞延貸款費用攤提。

With that, I'll turn the call back over to Bilal.

這樣，我會將電話轉回給比拉爾。

Thank you, Jeff. In closing, we believe our portfolio remains solid with no new non-accruals in the quarter. We are focused on increasing net investment income in the coming quarters, specifically by pursuing the sale of certain non-interest-earning equity positions and redeploying the proceeds into interest-earning assets.

謝謝你，傑夫。最後，我們相信我們的投資組合仍然穩固，本季沒有新的非應計項目。我們的重點是在未來幾季增加淨投資收入，特別是透過出售某些非生息股權部位並將收益重新部署到生息資產中。

Our focus remains on capital preservation, with approximately 100% of our loan portfolio at fair value being senior secured. And we remain confident in the overall quality and fundamentals of our portfolio. We have relied on our long-standing experience and investment discipline, which we believe has served us well.

我們的重點仍然是資本保全，我們大約 100% 的公允價值貸款組合有優先擔保。我們對投資組合的整體品質和基本面仍然充滿信心。我們依靠長期的經驗和投資紀律，我們相信這對我們很有幫助。

Since the beginning of 2011, the BDC has invested more than $1.9 billion with a cumulative net realized loss of just 2.7% over the past 13 years, while generating attractive risk-adjusted returns on our portfolio. We believe our business is especially equipped to navigate this market successfully due to the size, experience, and reputation of our adviser.

自 2011 年初以來，BDC 已投資超過 19 億美元，過去 13 年累計淨損失僅為 2.7%，同時我們的投資組合產生了頗具吸引力的風險調整回報。我們相信，由於我們顧問的規模、經驗和聲譽，我們的企業特別有能力成功地駕馭這個市場。

With a $4 billion corporate credit platform affiliated with a $29 billion asset management group, our adviser has broad expertise, including long-standing banking and capital markets relationships. Our corporate credit platform has gone through multiple credit cycles over the last 25-plus years. Our adviser and affiliates are also strongly aligned with shareholders, as they maintain an approximately 23% ownership in the company.

我們的顧問擁有價值 40 億美元的企業信貸平台，隸屬於價值 290 億美元的資產管理集團，擁有廣泛的專業知識，包括長期的銀行和資本市場關係。我們的企業信貸平台在過去 25 年多的時間裡經歷了多個信貸週期。我們的顧問和附屬公司也與股東保持密切聯繫，因為他們持有公司約 23% 的所有權。

With that, operator, please open up the call for questions.

那麼，接線員，請撥打電話詢問問題。

At this time, the conference has concluded. Thank you for attending today's presentation. You may now disconnect.

此時，會議已經結束。感謝您參加今天的演講。您現在可以斷開連線。