Ofs Capital Q2 Income Surpasses Expectations Despite Sharp Net Asset Value Decline.

Ofs Capital reported Q2 2025 net investment income per share of $0.25, beating estimates of $0.24. Total investment income reached $10.5 million, above the $10 million estimate. However, a $12.9 million net loss on investments and a decline in net asset value per share to $10.91 were notable. The company maintained its quarterly dividend at $0.34 per share, despite ongoing portfolio value declines and thin income coverage.

Ofs Capital (NASDAQ: OFS), a business development company (BDC) focused on lending to U.S. middle-market businesses, reported its earnings for the second quarter on July 31, 2025. The company's net investment income per share (GAAP) of $0.25 exceeded analyst expectations of $0.24, while total investment income (GAAP) reached $10.5 million, above the $10.0 million GAAP estimate. However, a significant net investment loss of $12.9 million and a decline in net asset value per share to $10.91 were notable. Despite these challenges, the company maintained its quarterly dividend at $0.34 per share [1].

Key Metrics:
- Net Investment Income per Share: $0.25 (Q2 2025) vs. $0.24 (Estimate)
- Total Investment Income: $10.5 million (Q2 2025) vs. $10.0 million (Estimate)
- Net Loss on Investments: $12.9 million (Q2 2025) vs. $10.8 million (Q1 2025)
- Net Asset Value per Share: $10.91 (Q2 2025) vs. $11.97 (Q1 2025)

Ofs Capital's portfolio value declined due to a $12.9 million net loss on investments, primarily from a single equity holding. The company's net asset value per share decreased from $11.97 as of March 31, 2025, to $10.91 as of June 30, 2025. Despite these pressures, the company maintained its quarterly dividend at $0.34 per share [2].

The company's business development strategy focuses on lending to middle-market firms, a segment often underserved by traditional banks. As of December 31, 2024, 67% of the investment portfolio was tied to these companies. Managing credit risk and portfolio diversification, while keeping up with BDC regulations and asset coverage ratios, are critical to its continued success [1].

Looking forward, investors will likely focus on future commentary regarding portfolio credit quality, potential further markdowns in the equity book, and the impact of higher debt costs on earnings. The company's management did not provide any explicit financial guidance for the current quarter or fiscal 2025 in the earnings release [1].

References:
[1] https://www.nasdaq.com/articles/ofs-capital-ofs-q2-income-beats-views
[2] https://www.tradingview.com/news/tradingview:a26cb7b08fad4:0-ofs-capital-corporation-announces-q2-2025-financial-results/