OFS Capital Corporation

Good morning and welcome to the OFS Capital Corporation fourth quarter 2023 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Steve Altibrando, Vice President of Capital Markets. Please go ahead.

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. 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.

Thank you, Steve. Earlier this morning, we announced our fourth quarter results. Our net investment income in the fourth quarter was 35 cents per share, which was below our net investment income of 40 cents per share in the third quarter. As you may recall, in the third quarter, we had some non-recurring investment income, which was the primary driver of the drop in net investment income in the fourth quarter. Even so, our net investment income remains above our distribution of $0.34 per share. We believe the overall performance of the companies in our portfolio remains solid. We had no new non-accruals this quarter, and we placed one investment back on accrual status. Additionally, we believe that we benefited from our balance sheet positioning with the majority of our debt being fixed rate and the vast majority of unknown portfolio being floating rate. A net asset value declined in the fourth quarter to $12.09 per share from $12.74 per share at September 30, primarily due to unrealized depreciation in a couple of positions. Looking ahead to 2024, we continue to believe our portfolio is well-positioned for the current macroeconomic environment. As part of our longstanding investment discipline, we have historically avoided investing in highly cyclical industries. We believe that our well-diversified portfolio is defensively positioned with our largest sector exposures in manufacturing, healthcare, business services, and technology. 100% of our loan portfolio at fair value is senior secured. We believe that being at the top of the capital structure will continue to benefit us in this economic environment. In terms of new originations, we expect to see an increase in M&A 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. Our financing continues to benefit our company. At the end of the fourth quarter, approximately 89% of our outstanding debt matures in 2026 or later, and 60% of our outstanding debt is unsecured. Our non-recourse $150 million senior loan facility with BNP Paribas matures in June 2027. 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, and that has a weighted average coupon of 4.8%, which is notably lower than current market pricing. Since the end of the fourth quarter, we retired our remaining $31.9 million of SBIC debt, which was due to mature in early 2025. Going into the new year, we anticipate that we will continue to benefit from the experience of our advisor, which manages approximately $4 billion across the loan 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. 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.