Investor Relations

Press Release

Oxford Square Capital Corp. Announces Results of Operations for the Quarter Ended September 30, 2018 and Announces Quarterly Distribution of $0.20 per Share

Company Release - 10/30/2018 8:00 AM ET

GREENWICH, Conn., Oct. 30, 2018 (GLOBE NEWSWIRE) -- Oxford Square Capital Corp. (NasdaqGS: OXSQ) (NasdaqGS: OXSQL) (“OXSQ,” the “Company,” “we,” “us” or “our”) announced today its financial results for the quarter ended September 30, 2018 and announced a distribution of $0.20 per share for the quarter ending December 31, 2018.

• As of September 30, 2018 net asset value (“NAV”) per share was $7.49, compared with the NAV per share of $7.56 at the prior quarter end and $7.55 as of December 31, 2017.

• For the quarter ended September 30, 2018 we recorded GAAP net investment income (“GAAP NII”) of approximately $8.6 million, or $0.18 per share, compared to $7.7 million, or $0.15 per share for the quarter ended June 30, 2018. We recorded net realized gains of approximately $0.2 million and a net increase in unrealized depreciation of approximately $2.3 million for the quarter ended September 30, 2018. In total, we had a net increase in net assets from operations of approximately $6.5 million, or $0.13 per share, for the quarter ended September 30, 2018 compared with $6.9 million, or $0.14 per share, for the quarter ended June 30, 2018.

• Total investment income for the third quarter of 2018 amounted to approximately $15.2 million, which represented an increase of $2.7 million from the second quarter of 2018.

  • For the quarter ended September 30, 2018 we recorded investment income from our portfolio as follows:
     
  • $6.5 million from our debt investments,
  • $7.2 million from our CLO equity investments, and
  • $1.5 million from all other sources.

• Our total expenses for the quarter ended September 30, 2018 were approximately $6.6 million, an increase of $1.8 million from the quarter ended June 30, 2018. This increase was primarily attributable to higher interest expense.

• During the third quarter of 2018:

  • We made investments of approximately $54.2 million in CLO equity, $35.6 million in corporate loan investments, and $2.0 million in preferred equity investments.
  • We received, or were entitled to receive, proceeds of $24.1 million from repayments and amortization payments on our debt investments, in addition to $5.0 million from sales of CLO equity investments and $7.1 million from sales of debt investments.

• As of September 30, 2018 the following metrics applied (note that none of these values represent a total return to shareholders):

  • The weighted average yield of our debt investments was 9.4% at current cost, compared with 9.7% as of June 30, 2018.
  • The weighted average effective yield of our CLO equity investments at current cost was 14.8%, compared with 14.5% as of June 30, 2018.
  • The weighted average cash distribution yield of our CLO equity investments at current cost was 18.6%, compared with 18.0% as of June 30, 2018. 

• Our weighted average credit rating on a fair value basis was 2.0 at the end of the third quarter of 2018, which is consistent with the rating at the end of the second quarter of 2018.

• As of September 30, 2018 we had no investments on non-accrual status.

• On October 26, 2018 our Board of Directors declared the following distribution on our common stock:

Quarter EndingRecord DatePayment DateAmount Per Share
December 31, 2018December 17, 2018December 31, 2018$0.20

• On February 5, 2018 the Board of Directors authorized a stock repurchase program of $25 million. Since the program’s inception through September 30, 2018, we have repurchased approximately 2.3 million shares of our common stock at a weighted average share price of $6.47 per share, totaling $15.1 million. Accordingly, over this period, the program has produced an accretion to NAV of approximately $0.05 per share.

• On October 12, 2018 Oxford Square Funding 2018, LLC amended its credit facility (“Facility”) with Citibank, N.A. Under the amended Facility, an additional borrowing amount of approximately $37.3 million was made under the same terms as the existing credit agreement. The Company posted additional collateral with a principal notional value of $76.4 million. All other existing terms of the Facility remained unchanged. 

We will host a conference call to discuss our third quarter results today, Tuesday, October 30, 2018 at 09:00 AM ET. Please call 1-888-339-0740 to participate. A recording of the conference call will be available to replay for approximately 30 days following the call. The replay number is 1-877-344-7529, and the replay passcode is 10125846.

A presentation containing further detail regarding our quarterly results of operations has been posted under the Investor Relations section of our website at www.oxfordsquarecapital.com.

The following financial statements are unaudited and without footnotes.  Readers who would like additional information should obtain our Form 10-Q for the period ended September 30, 2018 and subsequent reports on Form 10-Q as they are filed.

OXFORD SQUARE CAPITAL CORP.
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(unaudited)
      
 September 30, 2018  December 31, 2017 
 (unaudited)    
ASSETS     
Non-affiliated/non-control investments (cost of $506,898,656 and $418,990,080, respectively) $486,312,794  $400,223,439 
Affiliated investments (cost of $9,126,017 and $10,528,740, respectively)  19,103,214   18,218,787 
Cash equivalents  8,636,939   30,013,842 
Restricted cash 3,450,325    
Interest and distributions receivable  4,706,982   5,085,494 
Other assets  508,139   579,694 
Total assets $522,718,393  $454,121,256 
LIABILITIES       
Notes payable – Credit Facility, net of deferred issuance costs $87,534,595  $ 
Notes payable – 6.50% Unsecured Notes, net of deferred issuance costs  62,583,019   62,340,159 
Base management fee and net investment income incentive fee payable to affiliate  3,404,982   2,706,099 
Accrued interest payable  364,738   11,621 
Accrued expenses  563,644   644,735 
Total liabilities  154,450,978   65,702,614 
        
NET ASSETS       
Common stock, $0.01 par value, 100,000,000 shares authorized; 49,146,266
and 51,479,409 shares issued and outstanding, respectively 
 491,463   514,794 
Capital in excess of par value  514,216,403   529,297,749 
Distributions in excess of net investment income  (29,999,484)  (25,072,262)
Net unrealized depreciation on investments  (10,608,665)  (11,076,594)
Accumulated net realized losses on investments  (100,580,578)  (100,007,929)
Accumulated realized losses on extinguishment of debt  (5,251,724)  (5,237,116)
Total net assets  368,267,415   388,418,642 
Total liabilities and net assets $522,718,393  $454,121,256 
Net asset value per common share $7.49  $7.55 


OXFORD SQUARE CAPITAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 
 Three Months
Ended
September 30, 2018
 Three Months
Ended
September 30, 2017
 Nine Months
Ended
September 30, 2018
 Nine Months
Ended
September 30, 2017
INVESTMENT INCOME               
From non-affiliated investments:               
Interest income – debt investments $6,461,737  $5,306,698  $18,134,829  $19,096,102 
Income from securitization vehicles and investments  7,217,804   8,086,059   20,121,432   26,081,676 
Other income  1,468,611   1,007,230   2,555,797   2,517,401 
Total investment income from non-affiliated investments  15,148,152   14,399,987   40,812,058   47,695,179 
From affiliated investments:               
Interest income – debt investments  70,300   97,710   271,916   280,151 
Total investment income from affiliated investments  70,300   97,710   271,916   280,151 
Total investment income 15,218,452   14,497,697   41,083,974   47,975,330 
EXPENSES               
Base management fee  1,834,856   2,004,391   5,257,061   6,456,566 
Interest expense  2,258,403   3,701,533   4,635,177   11,135,451 
Professional fees  366,399   720,500   871,476   2,062,734 
Compensation expense  210,262   237,686   686,484   676,059 
General and administrative  365,902   501,464   1,200,097   1,718,627 
Total expenses before incentive fee  5,035,822   7,165,574   12,650,295   22,049,437 
Net investment income incentive fee  1,570,126   564,370   3,410,068   2,827,991 
Total expenses  6,605,948   7,729,944   16,060,363   24,877,428 
Net investment income  8,612,504   6,767,753   25,023,611   23,097,902 
Net change in unrealized appreciation/(depreciation) on investments               
Non-Affiliated investments  (2,693,363)  1,884,023   (1,819,221  12,643,254 
Affiliated investments  423,621   666,278   2,287,150   588,167 
Total net change in unrealized appreciation/(depreciation) on investments  (2,269,742)  2,550,301   467,929   13,231,421 
Net realized gains/(losses)               
Non-Affiliated investments  178,914   (1,066,399)  (577,890)  (5,992,111)
Affiliated investments  5,241      5,241    
Extinguishment of debt  (14,608)  (2,235,636)  (14,608)  (3,149,338)
Total net realized gains/(losses) 169,547   (3,302,035)  (587,257)  (9,141,449)
Net increase in net assets resulting from operations $6,512,309  $6,016,019  $24,904,283  $27,187,874 
Net increase in net assets resulting from net investment income per common share:               
(Basic and Diluted)$0.18  $0.13  $0.50  $0.45 
Net increase in net assets resulting from operations per common share:               
(Basic and Diluted) $0.13  $0.12  $0.50  $0.53 
Weighted average shares of common stock outstanding:               
Basic  49,195,368   51,479,409   50,153,321   51,479,409 
Diluted  49,195,368   59,727,707   50,153,321   59,727,707 
Distributions per share $0.20  $0.20  $0.60  $0.60 

OXFORD SQUARE CAPITAL CORP. 

FINANCIAL HIGHLIGHTS - UNAUDITED

Financial highlights for the three and nine months ended September 30, 2018 and September 30, 2017 are as follows:

 Three Months Ended
September 30, 2018
 Three Months Ended
September 30, 2017
 Nine Months Ended
September 30, 2018
 Nine Months Ended
September 30, 2017
Per Share Data             
Net asset value as of beginning of period $7.56  $7.51  $7.55  $7.50 
Net investment income(1)  0.18   0.13   0.50   0.45 
Net realized and unrealized (losses)/gains (2)  (0.05  (0.01)  (0.01)  0.08 
Net change in net asset value from operations  0.13   0.12   0.49   0.53 
Distributions per share from net investment income  (0.12  (0.20)  (0.52  (0.60)
Tax return on capital  (0.08     (0.08)   
Total distributions(3)  (0.20  (0.20)  (0.60  (0.60)
Effect of shares repurchased, gross        0.05    
Net asset value at end of period $7.49  $7.43  $7.49  $7.43 
Per share market value at beginning of period $6.90  $6.34  $5.74  $6.61 
Per share market value at end of period $7.12  $6.85  $7.12  $6.85 
Total return based on market value(4)  6.09  11.20 %  35.52  13.00 %
Total return based on net asset value(5)  1.76  1.60 %  7.20  7.07 %
Shares outstanding at end of period  49,146,266   51,479,409   49,146,266   51,479,409 
Ratios/Supplemental Data(8)             
Net assets at end of period (000’s)  368,267   382,293   368,267   382,293 
Average net assets (000’s)  370,269   384,433   379,045   386,146 
Ratio of operating expenses to average net assets(6)  7.14  8.04 %   5.65  8.59
Ratio of net investment income to average net assets(6)  9.30  7.04 %   8.80  7.98 % 
Portfolio turnover rate(7)  7.78  6.52 %   24.77  32.3 %

___________

(1)Represents per share net investment income for the period, based upon average shares outstanding.
(2)Net realized and unrealized gains include rounding adjustments to reconcile change in net asset value per share.
(3)Management monitors available taxable earnings, including net investment income and realized capital gains, to determine if a tax return of capital may occur for the year. To the extent the Company’s taxable earnings fall below the total amount of the Company’s distributions for that fiscal year, a portion of those distributions may be deemed a tax return of capital to the Company’s stockholders. The ultimate tax character of the Company’s earnings cannot be determined until tax returns are prepared after the end of the fiscal year.
(4)Total return based on market value equals the increase or decrease of ending market value over beginning market value, plus distributions, divided by the beginning market value, assuming distribution reinvestment prices obtained under the Company’s distribution reinvestment plan, excluding any discounts. Total return is not annualized.
(5)Total return based on net asset value equals the increase or decrease of ending net asset value over beginning net asset value, plus distributions, divided by the beginning net asset value. Total return is not annualized.
(6)Annualized.
(7)Portfolio turnover rate is calculated using the lesser of the year-to-date cash investment sales and debt repayments or year-to-date cash investment purchases over the average of the total investments at fair value.
(8)The following table provides supplemental performance ratios (annualized) measured for the three and nine months ended September 30, 2018 and September 30, 2017:


 Three Months Ended
September 30, 2018
 Three Months Ended
September 30, 2017
 Nine Months Ended
September 30, 2018
 Nine Months Ended
September 30, 2017
Ratio of expenses to average net assets:           
Operating expenses before incentive fees 5.44 7.46 4.45 7.61
Net investment income incentive fees 1.70% 0.59% 1.20% 0.98%
Ratio of expenses, excluding interest expense 4.70 4.19 4.02 4.74

About Oxford Square Capital Corp.

Oxford Square Capital Corp. is a publicly-traded business development company principally investing in syndicated bank loans and debt and equity tranches of collateralized loan obligation vehicles. CLO investments may also include warehouse facilities, which are financing structures intended to aggregate loans that may be used to form the basis of a CLO vehicle.

Forward-Looking Statements

This press release contains forward-looking statements subject to the inherent uncertainties in predicting future results and conditions. Any statements that are not statements of historical fact (including statements containing the words “believes,” “plans,” “anticipates,” “expects,” “estimates” and similar expressions) should also be considered to be forward-looking statements. Certain factors could cause actual results and conditions to differ materially from those projected in these forward-looking statements. These factors are identified from time to time in our filings with the Securities and Exchange Commission. We undertake no obligation to update such statements to reflect subsequent events, except as may be required by law.

Contact:
Bruce Rubin
203-983-5280

Source: Oxford Square Capital Corp.

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