OFS Capital Corporation (NASDAQ:OFS) Q2 2020 Earnings Conference Call - Final Transcript

Jul 31, 2020 • 10:00 am ET

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OFS Capital Corporation (NASDAQ:OFS) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, and welcome to the OFS Capital Corporation Second Quarter 2020 Conference Call.

[Operator Instructions]

I would now like to turn the conference over to Steve Altebrando. Please go ahead, sir.

Executive
Steve Altebrando

Good morning, everyone, and thank you for joining us.

Also on the call today is Bilal Rashid, Chairman and Chief Executive Officer of OFS Capital; and Jeff Cerny, the Company's Chief Financial Officer and Treasurer. Please note that we issued a press release this morning announcing our second quarter results. This press release was subsequently filed on Form 8-K with the SEC. Both documents can be obtained under the Investor Relations section of our website at ofscapital.com.

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. 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. 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.

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

Executive
Bilal Rashid

Thank you, Steve. Good morning, and welcome.

We hope that you and your families continue to be safe and healthy. Given the challenging economic and public health impact of the ongoing COVID-19 pandemic, we are pleased that during the quarter our portfolio companies performed above our expectations. In the second quarter, we had only one loan placed on non-accrual out of a portfolio of 73 investments. In fact, we are encouraged that in this environment some of our portfolio companies have identified opportunities for growth both organically and through acquisitions. We are prepared to support these companies as they pursue these opportunities.

Our NAV per share increased in the second quarter, approximately 4% from the prior quarter to $10.1. The quarterly increase in NAV per share was largely due to unrealized gains related to fair values determined at the end of the quarter. Our net investment income of $0.19 per share was greater than our distribution of $0.17 per share. As you would expect, we continue to maintain close contact with our portfolio companies and remain focused on working with our borrowers to get through what is clearly a challenging and uncertain period.

As mentioned, we have been positioning our loan portfolio more defensively in terms of both industry selection and seniority in the capital structure. As a