OFS Credit Company Announces Financial Results for the Third Fiscal Quarter 2026
Core NII increased and covered OCCI’s dividend in fiscal Q3 2026, but investment losses reduced NAV and shrank the CLO portfolio.
THIRD QUARTER HIGHLIGHTS
-
Net investment income (“NII”) of
$4.2 million $0.14 $4.4 million $0.15 -
Core net investment income (“Core NII”)2 of
$6.3 million $0.21 $5.5 million $0.19 -
Net asset value (“NAV”) per common share of
$3.32 $0.40 $3.72 $0.38 -
During the fiscal quarter ended July 31, 2026, the interest income yield1 of our investment portfolio was
11.43% , based on average amortized cost. -
During the fiscal quarter ended July 31, 2026, we issued 13,500 shares of common stock through our At-the-Market offering, for net proceeds of
$0.1 million
OTHER RECENT EVENTS
-
On July 31, 2026, we caused notices to be issued to the holders of the
5.25% Series E Term Preferred Stock regarding the exercise of our option to partially redeem$5.0 million 5.25% Series E Term Preferred Stock on August 31, 2026. The 200,000 shares of5.25% Series E Term Preferred Stock were redeemed on August 31, 2026 at100% of their principal amount ($25 -
As previously announced, on August 17, 2026, our board of directors (the “Board”) declared monthly cash distributions of
$0.05 24.4% based on the closing market price of$2.46
SELECTED FINANCIAL HIGHLIGHTS |
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(in millions, except per share data) |
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At |
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July 31, 2026 |
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April 30, 2026 |
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Balance Sheet Highlights |
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Total investments, at fair value |
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$ |
181.5 |
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$ |
197.4 |
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Total outstanding preferred stock - principal |
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89.9 |
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89.9 |
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Total net assets |
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98.0 |
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109.0 |
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NAV per common share |
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3.32 |
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3.72 |
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Asset coverage ratio3 |
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209.1 |
% |
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221.3 |
% |
Operating Highlights |
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For the Fiscal Quarter Ended |
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(Per common share) |
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July 31, 2026 |
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April 30, 2026 |
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Net investment income |
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$ |
0.14 |
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$ |
0.15 |
|
Net realized loss on investments |
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(0.08 |
) |
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(0.26 |
) |
Net change in unrealized depreciation on investments |
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(0.30 |
) |
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(0.30 |
) |
Loss on redemption of preferred stock4 |
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— |
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— |
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Net earnings (loss) |
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$ |
(0.24 |
) |
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$ |
(0.41 |
) |
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Reconciliation of Core NII — Non-GAAP2 |
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Net investment income |
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$ |
0.14 |
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$ |
0.15 |
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CLO equity adjustments |
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0.07 |
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0.04 |
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Core NII |
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$ |
0.21 |
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$ |
0.19 |
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MANAGEMENT COMMENTARY
“While our third quarter results were impacted by continued pressure on our investment fair values, we observed a slowing pace of spread compression and valuation pressure towards the end of the third quarter,” said Bilal Rashid, Chief Executive Officer. “During the third quarter, Core NII increased to
PORTFOLIO AND INVESTMENT ACTIVITIES
As of July 31, 2026, the total fair value of our investment portfolio was
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At |
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Portfolio Overview ($ in millions) |
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July 31, 2026 |
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April 30, 2026 |
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Total investments, at fair value |
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$ |
181.5 |
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$ |
197.4 |
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Total number of issuers |
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78 |
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|
81 |
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Weighted-average effective yield6 |
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11.67 |
% |
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11.64 |
% |
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For the Fiscal Quarter Ended |
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Portfolio Purchases ($ in millions) |
|
July 31, 2026 |
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April 30, 2026 |
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CLO equity investments |
|
$ |
0.9 |
|
|
$ |
— |
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Total investments |
|
$ |
0.9 |
|
|
$ |
— |
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Weighted-average effective yield - period end |
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13.05 |
% |
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N/A |
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At July 31, 2026 |
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Portfolio Composition ($ in millions) |
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Amortized Cost |
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Fair Value |
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CLO equity investments |
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$ |
293.3 |
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$ |
179.4 |
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Other CLO equity-related investments (i.e., fee rebates) |
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1.6 |
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2.1 |
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Total investments |
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$ |
294.9 |
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$ |
181.5 |
|
RESULTS OF OPERATIONS
Interest Income
During the fiscal quarter ended July 31, 2026, interest income decreased to
Expenses
During the fiscal quarter ended July 31, 2026, total expenses decreased by
Net Realized and Unrealized Gain (Loss) on Investments
During the fiscal quarter ended July 31, 2026, net loss on investments of
DISTRIBUTIONS
September and October 2026 Common Stock Distributions
The following schedule applies to distributions for common stockholders of record on the close of business of each specific record date:
Month |
|
Record Date |
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Payment Date |
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Cash Distribution Per Share |
|
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September 2026 |
|
September 15, 2026 |
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September 30, 2026 |
|
$ |
0.05 |
|
October 2026 |
|
October 15, 2026 |
|
October 30, 2026 |
|
$ |
0.05 |
|
Dividend Reinvestment Plan (“DRIP”) – DRIP Shares Issued at
Common stockholders who participate in our DRIP have the opportunity to receive a
Common stockholders that are interested in participating in our DRIP should contact their broker or financial intermediary.
Additional information about our DRIP and how to participate can be found at https://ir.ofscreditcompany.com/shareholder-services/dividend-reinvestment-plan. We make our website content available for informational purposes only. It should not be relied upon for investment purposes, nor is it incorporated by reference into this press release.
Preferred Stock Distributions
As previously announced, on July 16, 2026, the Board declared monthly cash distributions for our
The following schedule applies to distributions for preferred stockholders of record on the close of business of each specific record date:
Preferred Stock Series |
|
Month |
|
Record Date |
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Payment Date |
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Cash Distribution Per Share |
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August 2026 |
|
August 14, 2026 |
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August 31, 2026 |
|
$ |
0.109375 |
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September 2026 |
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September 15, 2026 |
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September 30, 2026 |
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$ |
0.109375 |
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October 2026 |
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October 15, 2026 |
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October 30, 2026 |
|
$ |
0.109375 |
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November 2026 |
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November 16, 2026 |
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November 30, 2026 |
|
$ |
0.109375 |
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December 2026 |
|
December 15, 2026 |
|
December 31, 2026 |
|
$ |
0.109375 |
|
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|
|
|
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August 2026 |
|
August 14, 2026 |
|
August 31, 2026 |
|
$ |
0.1640625 |
|
|
|
September 2026 |
|
September 15, 2026 |
|
September 30, 2026 |
|
$ |
0.1640625 |
|
|
|
October 2026 |
|
October 15, 2026 |
|
October 30, 2026 |
|
$ |
0.1640625 |
|
|
|
November 2026 |
|
November 16, 2026 |
|
November 30, 2026 |
|
$ |
0.1640625 |
|
|
|
December 2026 |
|
December 15, 2026 |
|
December 31, 2026 |
|
$ |
0.1640625 |
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January 2027 |
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January 15, 2027 |
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January 29, 2027 |
|
$ |
0.1640625 |
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August 2026 |
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August 14, 2026 |
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August 31, 2026 |
|
$ |
0.1666667 |
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September 2026 |
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September 15, 2026 |
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September 30, 2026 |
|
$ |
0.1666667 |
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October 2026 |
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October 15, 2026 |
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October 30, 2026 |
|
$ |
0.1666667 |
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November 2026 |
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November 16, 2026 |
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November 30, 2026 |
|
$ |
0.1666667 |
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December 2026 |
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December 15, 2026 |
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December 31, 2026 |
|
$ |
0.1666667 |
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January 2027 |
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January 15, 2027 |
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January 29, 2027 |
|
$ |
0.1666667 |
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OFS Credit Company, Inc. Statement of Assets and Liabilities (Unaudited) |
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As of July 31, 2026 |
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Assets: |
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Investments, at fair value (amortized cost of |
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$ |
181,500,267 |
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Cash and cash equivalents |
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|
7,779,807 |
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Other assets |
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328,614 |
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Total assets |
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189,608,688 |
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Liabilities: |
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Preferred stock (net of deferred issuance costs of |
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88,479,412 |
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Payable to adviser and affiliates |
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2,429,792 |
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Other liabilities |
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650,700 |
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Total liabilities |
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91,559,904 |
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Net assets |
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$ |
98,048,784 |
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Net assets consist of: |
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Common stock, par value of |
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$ |
29,492 |
|
Paid-in capital in excess of par |
|
|
225,116,515 |
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Total accumulated losses |
|
|
(127,097,223 |
) |
Total net assets |
|
$ |
98,048,784 |
|
|
|
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Net asset value per common share |
|
$ |
3.32 |
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OFS Credit Company, Inc. Statements of Operations (Unaudited) |
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Three Months Ended
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Nine Months Ended
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Investment income: |
|
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Interest income |
$ |
8,645,616 |
|
|
$ |
28,827,560 |
|
|
|
|
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Operating expenses: |
|
|
|
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Interest expense |
|
1,724,853 |
|
|
|
5,991,558 |
|
Incentive fees |
|
1,058,191 |
|
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|
3,522,745 |
|
Base management fees |
|
830,539 |
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2,781,836 |
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Administration fees |
|
328,962 |
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|
974,607 |
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Professional fees |
|
241,902 |
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|
768,052 |
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Other expenses |
|
228,405 |
|
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|
697,784 |
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Total operating expenses |
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4,412,852 |
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|
14,736,582 |
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Net investment income |
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4,232,764 |
|
|
|
14,090,978 |
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Net realized and unrealized gain (loss) on investments: |
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|
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Net realized loss on investments |
|
(2,379,240 |
) |
|
|
(10,482,285 |
) |
Net change in unrealized depreciation on investments |
|
(8,910,758 |
) |
|
|
(44,448,029 |
) |
Net loss on investments |
|
(11,289,998 |
) |
|
|
(54,930,314 |
) |
Loss on redemption of preferred stock |
|
— |
|
|
|
(13,360 |
) |
Net decrease in net assets resulting from operations |
$ |
(7,057,234 |
) |
|
$ |
(40,852,696 |
) |
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Weighted-average common shares outstanding |
|
29,378,371 |
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28,928,701 |
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About OFS Credit Company, Inc.
OFS Credit is a non-diversified, externally managed closed-end management investment company. The Company’s primary investment objective is to generate current income, with a secondary objective to generate capital appreciation, which we seek to achieve primarily through investments in CLO equity and debt securities. The Company’s investment activities are managed by OFS Capital Management, LLC, an investment adviser registered under the Investment Advisers Act of 19407, as amended, and headquartered in Chicago with additional offices in New York and Los Angeles.
Forward-Looking Statements
Statements in this press release regarding management’s future expectations, beliefs, intentions, goals, strategies, plans or prospects, including statements relating to: our results of operations, including NII, Core NII, earnings per share and net asset value and the factors that may affect such results; and other factors may constitute forward-looking statements. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including those risks, uncertainties and factors referred to in documents that may be filed by OFS Credit from time to time with the U.S. Securities and Exchange Commission (“SEC”), such as interest rate and inflation rate changes, the ongoing war between Russia and Ukraine, the escalated armed conflict and heightened regional tensions in the Middle East, activity in South America, the agenda of the U.S. presidential administration, including the impact of tariff enactment and tax reductions, trade disputes with other countries, instability in the U.S. and international banking systems, the risk of recession or the impact of the prolonged shutdown of U.S. government services and related market volatility, on our business, our portfolio companies, our industry and the global economy. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and, as a result, the forward-looking statements based on those assumptions also could be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this press release should not be regarded as a representation by us that our plans and objectives will be achieved. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this press release. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including Annual and Semi-Annual Reports on Form N-CSR and monthly portfolio investments reports filed on Form N-PORT for the third month of each of our fiscal quarters.
Supplemental Information Regarding Core Net Investment Income
We provide information relating to Core NII (a non-GAAP measure) on a supplemental basis. This measure is not provided as a substitute for GAAP NII, but in addition to it. Our non-GAAP measures may differ from similar measures by other companies, even if similar terms are used to identify such measures. Core NII represents GAAP NII adjusted for differences in applicable cash distributions received on our CLO equity and equity-related investments that have not been optionally redeemed relative to income recognized in accordance with GAAP. OFS Capital Management, LLC, our investment adviser, uses this information in its internal analysis of results and believes that this information may be informative in gauging the quality of the Company’s financial performance, identifying trends in its results, and providing meaningful period-to-period comparisons.
Income from investments in the “equity” class securities of CLO vehicles, for GAAP purposes, is recorded using the effective interest method; this is based on an estimated effective yield, at current amortized cost, to the expected redemption of the security utilizing assumed cash flows, including those CLO equity investments that have not made their inaugural distribution for the relevant period end. The result is an estimated effective yield for the investment in which the respective investment’s cost basis is adjusted quarterly based on the difference between the actual cash received, or distributions entitled to be received, and the income recognized via the estimated effective yield calculation. Accordingly, investment income recognized on CLO equity and equity-related securities in the GAAP statement of operations differs from the cash distributions actually received by the Company during the period (referred to below as “CLO equity adjustments”). Therefore, management believes that Core NII may provide a useful indicator of distributable operating income, as this reflects a measure of potential cash availability, net of operating expenses, that could be utilized to cover distributions to common stockholders. We note that this non-GAAP measure has no bearing on the tax character of the common stock distributions made during the period, and future distributions are not guaranteed. A portion of current and future common stock distributions may consist of a return of capital for tax purposes. The actual tax character of our earnings cannot be finally determined until our tax return is prepared after the close of our taxable year.
The following table provides a reconciliation of GAAP NII to Core NII for the fiscal periods presented:
|
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For the Fiscal Quarter Ended
|
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For the Fiscal Quarter Ended
|
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Amount |
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Per Common Share Amount |
|
Amount |
|
Per Common Share Amount |
||||||||
Net investment income |
|
$ |
4,232,764 |
|
|
$ |
0.14 |
|
|
$ |
4,379,722 |
|
|
$ |
0.15 |
|
CLO equity adjustments |
|
|
2,066,595 |
|
|
|
0.07 |
|
|
|
1,103,694 |
|
|
|
0.04 |
|
Core NII |
|
$ |
6,299,359 |
|
|
$ |
0.21 |
|
|
$ |
5,483,416 |
|
|
$ |
0.19 |
|
The following table provides a reconciliation of GAAP NII to Core NII for the nine months ended July 31, 2026 and 2025:
|
|
For the Nine Months Ended
|
|
For the Nine Months Ended
|
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|
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Amount |
|
Per Common Share Amount |
|
Amount |
|
Per Common Share Amount |
||||||||
Net investment income |
|
$ |
14,090,978 |
|
|
$ |
0.49 |
|
|
$ |
16,373,941 |
|
|
$ |
0.66 |
|
CLO equity adjustments |
|
|
6,801,447 |
|
|
|
0.23 |
|
|
|
8,891,204 |
|
|
|
0.36 |
|
Core NII |
|
$ |
20,892,425 |
|
|
$ |
0.72 |
|
|
$ |
25,265,145 |
|
|
$ |
1.02 |
|
OFS® and OFS Credit® are registered trademarks of Orchard First Source Asset Management, LLC.
OFS Capital Management™ is a trademark of Orchard First Source Asset Management, LLC.
_________________________________ |
1 Interest income yield is calculated as total investment income earned on the investment portfolio (excluding idle cash interest income) divided by the average total investments at cost (annualized). |
2 On a supplemental basis, we disclose Core NII, which is a financial measure calculated and presented on a basis of methodology other than in accordance with accounting principles generally accepted in |
3 Under the Investment Company Act of 1940, as amended, we are permitted to issue senior securities, including preferred stock, provided that we maintain an asset coverage of at least |
4 For the fiscal quarter ended April 30, 2026, loss on redemption of preferred stock rounds to less than |
5 Calculated as CLO equity and equity-related cash distributions received during the quarter, excluding distributions on CLO equity investments that have been optionally redeemed, divided by average CLO equity and equity-related investments at amortized cost (annualized). |
6 Based on amortized cost at period end; excludes discount accretion on CLO debt investments, if applicable. |
7 Registration does not imply a certain level of skill or training. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20260917723559/en/
INVESTOR RELATIONS:
OFS Credit Company, Inc.
Steve Altebrando
847-734-2085
investorrelations@ofscreditcompany.com
Source: OFS Credit Company, Inc.