Ofs Capital Corporation · NASDAQ:OFS
Ofs Capital — Investor Presentation (April 2015)
21 slides from Ofs Capital's investor presentation, Apr 1, 2015
Slide 1: OFS Capital Corporation April 2015
1 OFS Capital Corporation (NASDAQ: OFS) April 2015 1
Slide 2: Important Notice
2 Important Notice This presentation contains "forward looking statements" that are subject to risks and uncertainties. Actual outcomes and results could differ materially from those suggested by this presentation due to the impact of many factors beyond the control of OFS Capital Corporation ("OFS
Slide 3: OFS Capital Corporation
3 OFS Capital Corporation OFS Capital Management (1) • External manager of OFS Capital Corporation (“OFS Capital”) • Full - service provider of capital and leveraged finance solutions since 1994 • $1.8 billion Assets Under Management (1)(2) • Broad range of industry - specific investment professiona
Slide 4: Investment Thesis
4 Investment Thesis □ Current Focus on Lower Middle Market Given Risk - Adjusted Returns » Focus on lower middle market, non - sponsored companies yields optimal risk - adjusted pricing, leverage and structure » Direct lending portfolio weighted average yield of 11.6% provides meaningful pricing pre
Slide 5: Investment Portfolio Snapshot 2014 Year-End
5 Investment Portfolio Snapshot 2014 Year - End Club Loans Direct Lending Portfolio Portfolio Mix 38% of total investments 62% of total investments Portfolio Companies 36 companies 26 companies Fair Value $118 million $194 million Assets Senior secured, $123 million Senior secured, $123 million Subo
Slide 6: Executing on Strategic Initiatives Since November 2012 IPO
6 Executing on Strategic Initiatives Since November 2012 IPO 6 □ Raised $100 million in 4Q’12 IPO □ Completed acquisition of remaining interest in SBIC Fund (12/2013) □ Bilal Rashid named Chairman and CEO, Jeff Cerny named CFO (7/10/2014) □ I ncreased investment staff and technology infrastructure □
Slide 7: Executing on Strategic Initiatives Since November 2012 IPO
7 Executing on Strategic Initiatives Since November 2012 IPO 7 Growing Origination Capacity Robust Infrastructure Increasing Brand Recognition Growing Portfolio More Repeat Business, Add - ons Bringing Partners in to Diversify Partners Reciprocating $0 $50 $100 $150 $200 $250 $300 $350 1Q'13 2Q'13 3
Slide 8: Balance Sheet Capacity To Fuel Further Growth
8 Balance Sheet Capacity To Fuel Further Growth 1) 1 st SBIC » $44 million of remaining lending capacity (1) 2) 2 nd SBIC application pending (2) » $ 75 million of incremental SBA debentures 3) Room to optimize the portfolio » $50 million in equity capital invested in club loans » W eighted avg. yie
Slide 9: Diversified Loan Book
9 Diversified Loan Book Industry Diversification (1) Geographic Diversification (1) 9 Aerospace & Defense , 6% Banking, Finance, Insurance & Real Estate , 9% Capital Equipment , 12% Chemicals, Plastics & Rubber , 6% Construction & Building , 4% Consumer goods: Non - durable , <1% Containers, Packagi
Slide 10: Positioned To Benefit From Rising Rates
10 Positioned To Benefit From Rising Rates 10 Earnings Sensitivity of Loan Book (1)(2) (Annual change ) 3 - Month Libor NII/Share Benefit 0.25% N/A 1% (Floor) ($0.02) 2% $0.08 3% $0.21 4% $0.33 5% $0.46 1) 2014 year - end. 2) Assumes 20% incentive fee and a constant balance sheet; does not adjust fo
Slide 11: SBIC License Provides Highly Attractive Financing
11 SBIC License Provides Highly Attractive Financing » Attractively financed through existing SBIC license » License provides access to 10 - year fixed, low cost, covenant - light financing • Loans are pooled and fixed on a semi - annual basis » Allows 2x1 leverage versus 1x1 statutory limit for non
Slide 12: SBIC Debentures, 2014 Year-End
12 SBIC Debentures, 2014 Year - End Maturity Principal Rate 2022 and beyond $127 million Avg. 3.5% Remaining SBIC Borrowing Capacity $23 million Average Weighted Yield to Fair Value on Assets in SBIC 11.6% (1) 2 nd SBIC license would provide access to additional $75 million in highly attractive debe
Slide 13: Access To Infrastructure And Resources of $1.8 Billion Credit Platform
13 Access To Infrastructure And Resources of $ 1.8 Billion Credit Platform Richard Ressler Chairman of Investment Committee • Co - Founder and Chairman of the Executive Committee of OFS Management • Founder of Orchard Capital Corporation, an investment and consulting firm • Co - Founder and Principa
Slide 14: Access To Infrastructure And Resources of $1.8 Billion Credit Platform
14 Access To Infrastructure And Resources of $ 1.8 Billion Credit Platform » Growing Origination Capacity » Recognition of the OFS brand in the marketplace as a provider of flexible capital solutions » Bolstered investment team since IPO » National footprint - headquartered in Chicago; investment of
Slide 15: Summary
15 Summary □ Current Focus on Lower Middle Market Given Risk - Adjusted Returns » Focus on lower middle market, non - sponsored companies yields optimal risk - adjusted pricing, leverage and structure » Direct lending portfolio weighted average yield of 11.6% provides meaningful pricing premium vs.
Slide 16: Appendix
16 Appendix 16
Slide 17: Consolidated Statements of Operations
17 Consolidated Statements of Operations 17 ($ in thousands, except per share data) 12/31/14 9/30/14 6/30/14 3/31/14 (unaudited) (unaudited) (unaudited) (unaudited) Investment income Interest income 6,248$ 5,593$ 4,580$ 4,915$ Dividends and fees 705 604 78 97 Total investment income 6,953 6,197 4,65
Slide 18: Non-GAAP Financial Measure – Adjusted Net Investment Income
18 Non - GAAP Financial Measure – Adjusted Net Investment Income 18 On a supplemental basis, we disclose Adjusted NII (including on a per share basis), which is a financial measure calculated a nd presented on a basis of methodology other than in accordance with generally accepted accounting princip
Slide 19: Consolidated Balance Sheets
19 Consolidated Balance Sheets 19 ($ in thousands) 12/31/14 9/30/14 6/30/14 3/31/14 12/31/13 (audited) (unaudited) (unaudited) (unaudited) (audited) Investments, at fair value 312,234$ 266,179$ 230,723$ 228,002$ 237,919$ Cash and cash equivalents 12,447 14,288 21,393 36,999 28,569 Deferred financing
Slide 20: Debt Summary, 2014 Year-End
20 Debt Summary, 2014 Year - End 20 ($ in millions) Capacity Drawn Maturity Fixed/Variable Rate Revolving Line of Credit (1) $100.0 $72.6 Dec-18 L+250 2.8% SBA debentures $150.0 $14.0 Sep-22 Fixed 3.1% $7.0 Sep-23 Fixed 4.5% $5.0 Mar-24 Fixed 4.0% $4.1 Sep-24 Fixed 3.8% $31.3 Sep-24 Fixed 3.4% $65.9
Slide 21: OFS Capital Corporation April 2015
21 OFS Capital Corporation (NASDAQ: OFS) April 2015 21