OFS Credit Company, Inc. ("OCCI") | Investor Presentation |
NASDAQ: OCCI (common stock) | June 2024 |
NASDAQ: OCCIN and OCCIO (preferred stock) |
www.ofscreditcompany.com | ©2024 OFS Credit Company
Important Disclosures
This presentation and the information and views included herein do not constitute investment advice, or a recommendation or an offer to enter into any transaction with OFS Credit Company, Inc. (the "Company" or "OCCI") or any of its affiliates. This presentation is provided for informational purposes only, does not constitute an offer to sell securities of the Company or a solicitation of an offer to purchase any such securities, and is not a prospectus. From time to time, the Company may have a registration statement relating to one or more of its securities on file with the Securities and Exchange Commission ("SEC"). Any registration statement that has not yet been declared effective by the SEC, and any prospectus relating thereto, is not complete and may be changed. Any securities that are the subject of such a registration statement may not be sold until the registration statement filed with the SEC is effective.
This presentation is solely for the use of the intended recipient(s). The information and its contents are the property of OFS and/or the Company. Any unauthorized dissemination, copying or use of this presentation is strictly prohibited and may be in violation of law. This presentation is being provided for informational purposes only.
Investors should read the Company's prospectus and SEC filings (which are publicly available on the EDGAR Database on the SEC website at http://www.sec.gov) carefully and consider their investment goals, time horizons and risk tolerance before investing in the Company. Investors should consider the Company's investment objectives, risks, charges and expenses carefully before investing in securities of the Company. There is no guarantee that any of the goals, targets or objectives described in this presentation will be achieved. An investment in the Company is not appropriate for all investors, is speculative and entails substantial risk. An investment in the Company is not intended to be a complete investment program. Shares of closed-end investment companies, such as the Company, frequently trade at a discount from their net asset value, which may increase investors' risk of loss.
Past performance is not indicative of, or a guarantee of, future performance. The performance and certain other portfolio information quoted herein represents information as of dates noted herein. Nothing herein shall be relied upon as a representation as to the future performance or portfolio holdings of the Company. Investment return and principal value of an investment will fluctuate, and shares, when sold, may be worth more or less than their original cost. The Company's performance is subject to change since the end of the period noted in this report and may be lower or higher than the performance data shown herein.
Neither OFS nor the Company provides legal, accounting or tax advice. Any statement regarding such matters is explanatory and may not be relied upon as definitive advice. Investors should consult with their legal, accounting and tax advisers regarding any potential investment. The information presented herein is as of the dates noted herein and is derived from financial and other information of the Company, and, in certain cases, from third party sources and reports (including reports of third party custodians, CLO collateral managers and trustees) that have not been independently verified by the Company. As noted herein, certain of this information is estimated and unaudited, and therefore subject to change. We do not represent that such information is accurate or complete, and it should not be relied upon as such. This report does not purport to be complete and no obligation to update or revise any information herein is being assumed.
Information contained on our website is not incorporated by reference into this report and you should not consider information contained on our website to be part of this report or any other report we file with the SEC.
This presentation contains "forward looking statements" that are subject to risks and uncertainties. Forward-looking statements can be identified by terminology such as "anticipate," "believe," "could," "could increase the likelihood," "estimate," "expect," "intend," "is planned," "may," "should," "will," "will enable," "would be expected," "look forward," "may provide," "would" or similar terms, variations of such terms or the negative of those terms. Such forward-looking statements involve known and unknown risks, uncertainties and other factors including those risks, uncertainties and factors referred to in the Company's public filings with the SEC. As a result of such risks, uncertainties and factors, actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. The Company is providing the information as of this date and assumes no obligations to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
OFS is a brand name and is meant to include Orchard First Source Asset Management Holdings, LLC, and its direct and indirect subsidiaries, including OFS Capital Management, LLC, OFS CLO Management, LLC, OFS CLO Management II, LLC and OFS CLO Management III, LLC, which are registered investment advisers, OFS Capital Corporation, a publicly traded business development company (NASDAQ "OFS"), OFS Credit Company, Inc., a publicly traded registered closed-end fund (NASDAQ "OCCI"), and their predecessor entities.
CIM Assets Owned and Operated (AOO) represents the aggregate assets owned and operated by CIM on behalf of partners (including where CIM contributes alongside for its own account) and co-investors, whether or not CIM has discretion, in each case without duplication.
Please note, changes in global, national, regional or local economic, demographic or capital market conditions (including those caused by the impacts of the ongoing war between Russia and Ukraine, the escalated armed conflict in the Middle East, rising interest and elevated inflation rates, instability in the U.S. and international banking systems, the risk of recession or a shutdown of U.S. government services and related market volatility) may continue to have a significant negative impact on our business, financial condition, results of operations and cash flows and those of our portfolio companies, including our and their ability to achieve our respective objectives.
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 are the property of their respective owners.
www.ofscreditcompany.com | ©2024 OFS Credit Company | 2 |
OFS Credit Company (NASDAQ: OCCI)
Overview | » | OCCI is a Nasdaq-listedclosed-end fund that primarily invests in CLO equity and debt securities |
» | Per share Net Asset Value of $7.34 as of April 30, 2024 | |
» | OFS was established in 1994 and has $4.0 billion of assets under management1 | |
Advisor | » | Focused on: (1) structuring and investing in CLO equity and CLO debt; (2) managing CLOs (investing in broadly |
syndicated loans financed through CLOs); and (3) direct loan origination | ||
Alignment of Interest | » | As of April 30, 2024, insiders own ~5.3% of OCCI's common shares |
» | Collateralized by floating rate loans of large, U.S.-based corporations | |
CLOs are an attractive asset | » | Diversified by a large number of distinct underlying borrowers across various industry sectors with varying vintages |
class | » | Financed with matched funding (meaning that investments are planned to correspond to the timing of payments on |
financing) | ||
Historical Dividends | » | Annual cash distribution of $1.262, 3 |
» | ~$11.65 of distributions declared since October 2018 IPO4 | |
Why OFS and OCCI?
Long-Standing CLO Manager with Expertise in Structuring CLOs and | OFS is an Experienced CLO Equity Investor |
Investing in the Underlying Corporate Loans | |
Robust Credit Team with Analyst Coverage of the Senior Secured Loan | OFS has a Strong Balance Sheet and Low Leverage |
Market | |
1 As of March 31, 2024. Includes OFS Capital Management, LLC, and its affiliated registered investment advisers, OFS CLO Management, LLC, OFS CLO Management II, LLC and OFS CLO Management III, LLC. |
2. Reflects annualized distribution rate on the most recent monthly all-cash distribution of $0.105 declared on shares of common stock for each of the three months in the fiscal quarter ending July 31, 2024. The May 2024 distribution was paid on May 31, 2024, in cash to stockholders of record as of May 21, 2024. The June 2024 distribution is payable on June 28, 2024, in cash to stockholders of record as of June 18, 2024. The July 2024 distribution is payable on July 31, 2024, in cash to stockholders of record as of July 19, 2024. | 3. Based on OCCI's estimated net investment income for the five months ended May 31, 2024, OCCI estimates that 94% of calendar year distributions were from ordinary income and 6% were from return of capital. The Company's fiscal year differs from the calendar year period on which the tax character of distributions is determined for Form 1099-DIV reporting purposes. The ultimate tax character of the Company's distributions cannot be determined until the corresponding tax return is filed. The estimated information provided is not for tax reporting purposes and could differ materially from amounts reported to common shareholders on Form 1099-DIV. Past performance is not indicative of future results, and distributions are not guaranteed. | 4. Includes distributions declared on May 1, 2024.
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Second Fiscal Quarter 2024 Highlights1
- Net investment income ("NII") of $4.5 million, or $0.28 per common share, for the fiscal quarter ended April 30, 2024. This compares to NII of $4.6 million, or $0.29 per common share, for the fiscal quarter ended January 31, 2024. Net Asset Value per common share of $7.34 as of April 30, 2024.
- Core net investment income ("Core NII")2 of $8.4 million, or $0.53 per common share, for the fiscal quarter ended April 30, 2024. This compares to Core NII of $7.2 million, or $0.45 per common share, for the fiscal quarter ended January 31, 2024.
- During the fiscal quarter ended April 30, 2024, the earned income yield of our investment portfolio at amortized cost was 14.7%.
Fiscal Quarter Ended (Unaudited) | ||||
4/30/2024 | 1/31/2024 | |||
Per Common Share | ||||
Net investment income | $ | 0.28 | $ | 0.29 |
Net realized loss on investments | (0.12) | (0.12) | ||
Net unrealized appreciation (depreciation) on investments | (0.20) | 0.27 | ||
Net earnings (loss) | $ | (0.04) | $ | 0.44 |
Reconciliation of Core NII - Non-GAAP1 | ||||
Net investment income | $ | 0.28 | $ | 0.29 |
CLO equity adjustments | 0.25 | 0.16 | ||
Core NII | $ | 0.53 | $ | 0.45 |
- On May 1, 2024, OFS Credit's board of directors declared monthly cash distributions of $0.105 per common share, a 5% increase from the prior monthly distribution amount of $0.10 per common share, for common stockholders for each of the three months in the quarter ending July 31, 2024:
Month | Record Date | Payment Date | Cash Distribution Per Share |
May 2024 | May 21, 2024 | May 31, 2024 | $0.105 |
June 2024 | June 18, 2024 | June 28, 2024 | $0.105 |
July 2024 | July 19, 2024 | July 31, 2024 | $0.105 |
- Past performance is not indicative of future results, and distributions are not guaranteed.
- Core NII is a financial measure calculated and presented on a basis of methodology other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Core NII represents NII adjusted for differences in applicable cash distributions received on our CLO equity investments relative to income recognized in accordance with GAAP. See slide 18 "Supplemental Schedule - Core Net Investment Income" for additional information. Interest waterfall payments in excess of interest income accretion on CLO equity investments.
www.ofscreditcompany.com | ©2024 OFS Credit Company | 4 |
OFS Credit Company (NASDAQ: OCCI)
- We believe CLO equity has the potential to generate higher quarterly cash distributions relative to other high-yielding credit investments
- CLOs primarily invest in a diversified pool of loans to large, rated U.S. corporations
- Generally, first lien senior secured
- Floating rate loans and liabilities providing natural hedge in a changing rate environment
- Deep asset class with ~$1.0 trillion of CLOs outstanding1
- Access to infrastructure and resources of large platform
- OFS Capital Management is focused on investing in corporate credit and has $4.0 billion in assets under management2
- Senior management has worked together for over 10 years
- OFS Capital Management is uniquely positioned to manage OFS Credit Company
- OFS Capital Management has dual experience as both a CLO equity investor (structuring expertise) and CLO manager (deep knowledge of underlying senior secured corporate loans)
- OFS has managed CLOs since its inception and has invested approximately $23 billion in more than 11,000 transactions primarily through CLO vehicles3
- Source: BofA Global Research. As of March 31, 2024.
- As of March 31, 2024. Includes OFS Capital Management, LLC, and its affiliated registered investment advisers, OFS CLO Management, LLC, OFS CLO Management II, LLC and OFS CLO Management III, LLC.
- Refers to CLOs that OFS Capital Management managed and OFS CLO Management, OFS CLO Management II, LLC and OFS CLO Management III manage. These CLOs are not held by OFS Credit.
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Access to Infrastructure and Resources of Large Platform1
- OFS is part of a group of affiliated firms controlled by Richard Ressler that own, operate and manage approximately $33 billion of real assets and corporate credit
- Since 1994, OFS Capital Management2 has invested approximately $23 billion in more than 11,000 transactions and has offices in Chicago, Los Angeles and New York City
Richard S. Ressler
CIM Group
Real Estate / Infrastructure
$29.2 billion of Assets Owned or
Operated3
OFS Capital Management
Corporate Credit $4.0 billion AUM4
OCV Partners
Venture Capital
$133 million AUM5
OFS Credit Company
(NASDAQ: OCCI)
- Despite Mr. Ressler's involvement in each, none of CIM, OFS, or Orchard Capital Ventures has the benefit of any cross-guarantee. None of these entities are entitled to draw on the capital of any other, and no guarantee of the liabilities of any such entity by any other such entity should be inferred from their relationship.
- Includes OFSAM Holdings, its predecessor entity, and its direct and indirect subsidiaries.
- As of December 31, 2023. See Important Disclosures on page 2.
- As of March 31, 2024.
- As of December 31, 2023.
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Access to Infrastructure and Resources of Large Platform
- Investing across the U.S. corporate loan market
- Seasoned investment team with diverse skill set - dedicated industry analysts and loan and CLO structuring expertise within the platform
Middle Market Lending
- Primarily invests in senior secured, floating rate loans to US based middle-market borrowers
- Publicly traded BDC, OFS Capital Corporation (NASDAQ: "OFS")
- Hancock Park Corporate Income, Inc. - non-listed BDC
$4.0 Billion
Assets Under Management1
Structured Credit Investing
- Structure and invest in CMBS, CLO equity and debt
- Publicly traded closed-end fund, OFS Credit Company, Inc. (NASDAQ: "OCCI")
- SMAs/Sub-advisedaccounts
Broadly Syndicated Loans
- Invests in broadly syndicated loans, primarily in the 1st lien, senior secured tranches of the capital structure.
- CLOs
- SMAs/Sub-advisedaccounts
OFS Platforms
BDCs
Closed-end Listed Fund
SMAs/Sub-advised accounts
CLO Facilities
1. As of March 31, 2024. Includes OFS Capital Management, LLC, and its affiliated registered investment advisers, OFS CLO Management, LLC, OFS CLO Management II, LLC and OFS CLO Management III, LLC.
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Portfolio Composition and Years of Reinvestment
Portfolio Composition1
Years of Reinvestment Period2, 3
4
5
- Based on fair value as of April 30, 2024.
- Weighted by fair value as of April 30, 2024. Includes estimated reinvestment end dates for warehouse investments and unsettled trades.
- The weighted average years of reinvestment period remaining on the investment portfolio is 2.3 years.
- Represents the fair value of discounted cash flows from additional fees earned from CLO equity investments.
- Includes securities out of reinvestment period.
www.ofscreditcompany.com | ©2024 OFS Credit Company | 8 |
Portfolio Highlights
Fiscal Quarter Ended (Unaudited)
4/30/2024 | 1/31/2024 | 10/31/2023 | 7/31/2023 | 4/30/2023 | ||||||
Select Portfolio Funds Roll Data | ||||||||||
Beginning investment balance at cost | $ | 225,314,651 | $ | 219,978,627 | $ | 195,620,796 | $ | 187,809,208 | $ | 181,161,434 |
Portfolio purchases | 15,886,277 | 15,114,639 | 36,486,875 | 10,934,219 | 9,659,000 | |||||
Portfolio sales/repayments1 | (22,115,258) | (7,327,768) | (8,500,000) | (2,134) | (596,231) | |||||
Accretion/amortization2 | 6,201,465 | 6,375,834 | 6,463,474 | 6,486,103 | 6,624,691 | |||||
CLO equity waterfall payments | (9,739,010) | (8,826,681) | (10,092,518) | (9,606,600) | (9,039,686) | |||||
Ending investment balance at cost | $ | 215,548,125 | $ | 225,314,651 | $ | 219,978,627 | $ | 195,620,796 | $ | 187,809,208 |
Fiscal Quarter Ended (Unaudited) | ||||||||||
4/30/2024 | 1/31/2024 | 10/31/2023 | 7/31/2023 | 4/30/2023 | ||||||
Investment Mix - Based on Fair Value | ||||||||||
CLO equity | $ | 125,024,619 | $ | 124,656,334 | $ | 119,610,277 | $ | 117,452,848 | $ | 120,250,397 |
CLO debt | 38,283,192 | 44,731,684 | 41,998,429 | 20,738,248 | 14,034,112 | |||||
Loan accumulation facilities | - | 7,323,750 | 5,540,417 | 7,988,000 | 7,363,500 | |||||
Other3 | 1,304,499 | 923,583 | 948,605 | 896,387 | 935,090 | |||||
Total Investments | $ | 164,612,310 | $ | 177,635,351 | $ | 168,097,728 | $ | 147,075,483 | $ | 142,583,099 |
- Net of realized gains/(losses) on investments sold or repaid. Includes return of capital distributions received on CLO equity investments which have been optionally redeemed.
- Includes CLO equity and debt accretion.
- Represents the fair value of discounted cash flows from additional fees earned from CLO equity investments.
www.ofscreditcompany.com | ©2024 OFS Credit Company | 9 |
Debt Capital Summary as of April 30, 2024
NASDAQ | Payment | Optional | |||||
Funding Source: | Outstanding Par | Ticker | Coupon | Frequency | Redemption Date | Maturity Date | |
Preferred Stock | |||||||
Series C Term Preferred Stock | $ | 23,000,000 | OCCIO | 6.125% | Monthly | April 30, 2023 | April 30, 2026 |
Series D Term Preferred Stock | 3,000,000 | N/A | 6.000% | Monthly | June 30, 2022 | June 10, 2026 | |
Series E Preferred Stock | 35,000,000 | OCCIN | 5.250% | Monthly | December 31, 2023 | December 31, 2026 | |
Total Preferred Stock | $ | 61,000,000 | 5.617% |
Debt Mix by Remaining Legal Term1
Preferred Stock by Series
1. Percentages may not sum to 100% due to rounding
www.ofscreditcompany.com | ©2024 OFS Credit Company | 10 |
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OFS Credit Company Inc. published this content on 11 June 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 June 2024 12:48:04 UTC.