OFS Capital Corporation (OFS Capital), a business development company (BDC) and regulated investment company (RIC), reported a net increase in net asset value (NAV) per share from $12.09 to $12.85 during the fiscal year ending December 31, 2024. Net investment income (NII) decreased to $1.25 per share, down from $1.50 in the prior year, primarily due to a decrease in total investment income of $9 million, partially offset by a $5.5 million decrease in total expenses. The company's total outstanding debt decreased from $302.4 million to $248.4 million during the same period. Aggregate distributions declared for the year totaled $1.36 per share, exceeding the NII.
A significant portion of the increase in NAV was attributed to net gains on the investment portfolio totaling $11.7 million, or $0.87 per share. These gains resulted from $28.9 million in net unrealized appreciation, partially offset by $17.1 million in net realized losses. The net unrealized appreciation was largely driven by an $18.4 million increase in the fair value of the company's common equity investment in Pfanstiehl Holdings, Inc., a pharmaceutical ingredient manufacturer. This investment represented 21.8% of the portfolio's fair value and 51.8% of total net assets at year-end. Conversely, the realized losses stemmed from write-offs, debt restructurings, and sales of Structured Finance Securities.
The company's investment portfolio at year-end comprised $224.2 million in debt investments across 36 portfolio companies (85% first lien, 15% second lien), $108.6 million in equity investments across 15 companies, and $76.9 million in Structured Finance Securities across 18 investments. The weighted-average performing income yield on interest-bearing investments decreased from 13.9% in 2023 to 13.4% in 2024, primarily due to a decrease in the effective yield of the Structured Finance Security portfolio. During the year, OFS Capital purchased $93.4 million in new investments and received $128.8 million in proceeds from principal payments, sales, and distributions from existing investments.
The company's operations are managed by OFS Advisor, a wholly-owned subsidiary of OFSAM, under an investment advisory agreement. OFS Advisor receives a base management fee and an incentive fee based on the Company's performance. The company's administrative services are provided by OFS Services, another OFSAM affiliate, under an administration agreement. Jeffrey A. Cerny, the Chief Financial Officer, notified the Board of his intention to retire, effective March 31, 2025, and Kyle Spina was appointed as his successor. The Board declared a distribution of $0.34 per share for the first quarter of 2025. The company's 10-K filing also details various risk factors, including those related to its business structure, investments, and relationships with affiliates.
About OFS Capital Corp
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