OFS Capital Corporation

Good day and welcome to the OFS Capital Corporation fourth quarter 2025 earnings conference call. All participants will be in a 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 the touch-tone phone. 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. 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 Kyle Spina, 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. Substatements 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 incorrect, 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. Yesterday, we announced our fourth quarter earnings. Net investment income totaled $0.20 per share, down from $0.22 per share in the prior quarter. The decline was primarily driven by a lower net interest margin resulting from higher interest rates on our new unsecured notes. These notes refinanced our existing debt that was issued in a historically low interest rate environment. In doing so, we were able to meaningfully extend the maturity of our debt. In addition, the interest rates on our loan portfolio have been impacted by the Fed's continued reduction in benchmark rates, which also had an effect on our interest margin. Our net asset value at December 31 was $9.19 per share, compared to $10.17 per share in the prior quarter. The decline was primarily due to further markdowns of a couple of non-performing loans. In addition, we experienced unrealized depreciation on our CLO equity holdings due to spread tightening in the underlying loan collateral. Overall, we believe our credit portfolio is stable. During the quarter, we placed one loan on non-accrual. However, we placed one loan back on accrual status following the completion of a restructuring transaction. While we remain committed to preserving capital, we continue to be focused on improving our net investment income over the long term. This includes our efforts to monetize our minority equity position in Fansteel, our largest position in the portfolio with a fair value of approximately 79.4 million dollars at quarter end we are encouraged by the company's continued operational momentum and in our view believe its long-term outlook remains compelling a successful exit could improve net investment income and reduce portfolio concentration at the same time we remain disciplined in balancing the timing of a potential exit with the realization value of the asset in order to maximize our overall returns. Since our initial $200,000 investment in 2014, our position in fan steel has generated approximately $4.2 million in distributions to date. representing roughly a 19 times return on our costs. As we look ahead, the macroeconomic environment remains uncertain. From a monetary standpoint, the Fed held rates steady in January following three cuts in 2025. However, there remains potential for additional reductions in the near term. Because most of our loan portfolio is floating rate, further rate cuts could put additional pressure on our net investment income. On the other hand, further cuts could continue to reduce the interest burden on our portfolio companies and help improve their cash flows. We have deliberately constructed our loan portfolio to be resilient by avoiding highly cyclical industries and maintaining a strong diversification. Our loan portfolio is entirely composed of first and second lien senior secured loans with 95% of our loan holdings in first lien positions based on fair value, reflecting our commitment to positioning higher in the capital structure. As for new originations, middle market M&A activity this year has remained below expectations. However, we remain actively engaged with our existing portfolio companies and are prepared to deploy additional capital if needed. As discussed on prior calls, we continue to pursue efforts to strengthen our balance sheet by extending our debt maturities and reducing our outstanding debt. We have successfully pushed out all near-term maturities of our debt so that the earliest remaining maturity is in 2028. We have also lowered our total debt balance by $18.8 million to further deleverage the balance sheet. Last month, Pulley repaid our unsecured notes that were scheduled to mature in February 2026. In addition, In early January, we extended the maturity of our $25 million Bank of California facility to February 2028. Last month, we also entered into a credit facility with Netixis, which allowed us to refinance our existing facility with BNP. We believe that this new facility, which matures in 2031, further strengthens our balance sheet positioning. As we continue to operate in an uncertain environment, we remain confident in the experience and capabilities of our advisor. With approximately $4 billion in assets under management across the loan and structured credit markets, deep expertise across industries, and a track record spanning more than 25 years and multiple credit cycles, we believe we are well positioned to navigate the current landscape and respond to evolving conditions. With that, I'll turn the call over to Kyle Spina, our Chief Financial Officer, to give you more details and color for the quarter.