OFS Capital Reports Q2 2025 Financial Results

OFS Capital Corporation reported Q2 2025 financial results, with a focus on debt and equity investments in privately held middle-market companies in the US. The company aims to provide stockholders with current income and capital appreciation, and is managed by OFS Capital Management, LLC.

OFS Capital Corporation (NASDAQ: OFS) reported its second-quarter 2025 financial results, providing insights into its performance in the middle-market lending sector. The company, which focuses on providing flexible financing solutions to U.S. middle-market companies, reported a net investment income per share of $0.25, slightly exceeding analyst expectations of $0.24 [1]. However, the quarter was marked by significant challenges, including a net loss on investments of $12.9 million and a decline in net asset value per share from $11.97 to $10.91 [1].

Despite these setbacks, OFS Capital maintained its quarterly dividend at $0.34 per share, a decision that underscores its commitment to providing current income to stockholders. The company deployed $12.5 million in new investments during the quarter, up from $10.4 million in the prior period. This increase in new investments reflects the company's ongoing efforts to expand its portfolio and generate recurring interest income [1].

The quarter saw a net unrealized depreciation of $7.8 million on a single equity investment in Pfanstiehl Holdings, Inc., highlighting the risks associated with concentrated equity positions. Additionally, the company's loan portfolio showed mixed signals, with no new loans shifted to non-accrual status but an increase in the percentage of loans already on non-accrual status to 4.0% [1].

OFS Capital's balance sheet reflected a slight decline in total outstanding debt, moving from $248.1 million at the end of Q1 2025 to $243.4 million at the end of Q2 2025. The company also took action to refinance debt by issuing $69.0 million in new unsecured notes at an interest rate of 7.50% in July 2025 [1].

Management did not provide explicit financial guidance for the current quarter or fiscal 2025, leaving investors to focus on future commentary regarding portfolio credit quality, potential further markdowns in the equity book, and the impact of higher debt costs on earnings.

In conclusion, OFS Capital's Q2 2025 results demonstrate a mixed bag of performance. While the company exceeded expectations on net investment income, significant losses and a decline in net asset value per share highlight ongoing challenges. Investors will continue to monitor the company's ability to manage credit risk and generate income to support its dividend payout.

References:
[1] https://www.nasdaq.com/articles/ofs-capital-ofs-q2-income-beats-views
[2] https://www.businesswire.com/news/home/20250731185190/en/OFS-Capital-Corporation-Announces-Second-Quarter-2025-Financial-Results