Oxford Square Capital Corp. Announces Net Asset Value and Selected Financial Results for the Quarter Ended June 30, 2024 and Declaration of Distributions on Common Stock for the Months Ending October 31, November 30, and December 31, 2024

Rhea-AI Summary

Oxford Square Capital Corp. (OXSQ) announced financial results for Q2 2024. Key highlights include:

• NAV per share of $2.43 as of June 30, 2024, up from $2.42 on March 31, 2024
• Net investment income of $7.7 million ($0.13 per share), compared to $6.5 million ($0.11 per share) in Q1 2024
• Total investment income of $11.4 million, up from $10.7 million in Q1 2024
• Declared monthly distributions of $0.035 per share for October, November, and December 2024

The company recorded a net increase in net assets of $5.3 million, including $28.0 million in net unrealized appreciation, offset by $30.4 million in net realized losses. OXSQ made new investments of $28.8 million and received $19.2 million from sales and repayments.

Positive

• NAV per share increased from $2.42 to $2.43 quarter-over-quarter
• Net investment income rose to $7.7 million ($0.13 per share) from $6.5 million ($0.11 per share) in Q1 2024
• Total investment income increased to $11.4 million from $10.7 million in Q1 2024
• Weighted average cash distribution yield of CLO equity investments improved to 16.2% from 13.7% in Q1 2024
• Issued 2.9 million shares of common stock, raising net proceeds of $8.9 million

Negative

• Recorded net realized losses of $30.4 million
• Three debt investments in one portfolio company on non-accrual status with fair value of $0.5 million
• Preferred equity investments in one portfolio company on non-accrual status with fair value of $2.5 million
• Total expenses increased to $3.7 million from $3.5 million in Q1 2024

Insights

Financial Analyst

Oxford Square Capital Corp.'s Q2 2024 results show mixed signals. The NAV per share slightly increased to $2.43 from $2.42 in Q1. Net investment income (NII) rose to $7.7 million ($0.13 per share) from $6.5 million ($0.11 per share) in Q1, indicating improved profitability. However, the company recorded significant net realized losses of $30.4 million, largely offset by net unrealized appreciation of $28.0 million.

The weighted average yield of debt investments slightly decreased to 13.7% from 13.9%, while the cash distribution yield of CLO equity investments improved to 16.2% from 13.7%. This suggests a shift in the portfolio's yield profile. The company's investment activity shows net growth, with $28.8 million in new investments versus $19.2 million in repayments.

The declaration of consistent monthly distributions of $0.035 per share for Q4 2024 provides some stability for income-focused investors. However, the total return based on market value was -4.06% for the quarter, indicating negative market sentiment despite the improved NAV and NII.

Investment Strategist

Oxford Square's Q2 results present a complex picture for investors. The slight NAV increase and improved NII are positive signs, but the significant realized losses raise concerns about portfolio quality. The net unrealized appreciation largely offsetting these losses suggests potential recovery, but it's important to monitor if this materializes in future quarters.

The company's ability to raise $8.9 million through an at-the-market offering demonstrates access to capital, but also indicates potential dilution for existing shareholders. The weighted average credit rating improvement from 2.9 to 2.7 (based on principal amount) is a positive trend, albeit slight.

Investors should note the presence of non-accrual investments, totaling $3 million in fair value. While this represents a small portion of the portfolio, it's a red flag for potential future write-downs. The decrease in total expenses is positive for profitability, but the elimination of incentive fees might indicate lower performance relative to benchmarks.

Overall, while there are some improvements, the mixed results and market underperformance suggest caution. Income-focused investors may appreciate the stable distributions, but growth investors might find the current risk-reward profile less attractive.

GREENWHICH, Conn., Aug. 13, 2024 (GLOBE NEWSWIRE) -- Oxford Square Capital Corp. (NasdaqGS: OXSQ) (NasdaqGS: OXSQZ) (NasdaqGS: OXSQG) (the “Company,” “we,” “us” or “our”) announced today its financial results and related information for the quarter ended June 30, 2024.

• On August 8, 2024, our Board of Directors declared the following distributions on our common stock:
  

Month Ending	Record Date	Payment Date	Amount Per Share
October 31, 2024	October 17, 2024	October 31, 2024	$0.035
November 30, 2024	November 15, 2024	November 29, 2024	$0.035
December 31, 2024	December 17, 2024	December 31, 2024	$0.035

• Net asset value (“NAV”) per share as of June 30, 2024 stood at $2.43, compared with a NAV per share on March 31, 2024 of $2.42.
  

• Net investment income (“NII”) was approximately $7.7 million, or $0.13 per share, for the quarter ended June 30, 2024, compared with approximately $6.5 million, or $0.11 per share, for the quarter ended March 31, 2024.
  
• Total investment income for the quarter ended June 30, 2024 amounted to approximately $11.4 million, compared with approximately $10.7 million for the quarter ended March 31, 2024.
  • For the quarter ended June 30, 2024 we recorded investment income from our portfolio as follows:
    • $7.0 million from our debt investments;
    • $3.9 million from our CLO equity investments; and
    • $0.5 million from other income.
• Our total expenses for the quarter ended June 30, 2024 were approximately $3.7 million, compared with total expenses of approximately $4.1 million for the quarter ended March 31, 2024.
• As of June 30, 2024, the following metrics applied (note that none of these metrics represented a total return to shareholders):
  • The weighted average yield of our debt investments was 13.7% at current cost, compared with 13.9% as of March 31, 2024;
  • The weighted average effective yield of our CLO equity investments at current cost was 9.4%, compared with 9.5% as of March 31, 2024; and
  • The weighted average cash distribution yield of our cash income producing CLO equity investments at current cost was 16.2%, compared with 13.7% as of March 31, 2024.
• For the quarter ended June 30, 2024, we recorded a net increase in net assets resulting from operations of approximately $5.3 million, consisting of:
  • NII of approximately $7.7 million;
  • Net realized losses of approximately $30.4 million; and
  • Net unrealized appreciation of approximately $28.0 million.

• During the second quarter of 2024, we made investments of approximately $28.8 million and received approximately $19.2 million from sales and repayments of investments.
  
• Our weighted average credit rating was 2.3 based on total fair value and 2.7 based on total principal amount as of June 30, 2024, compared with a weighted average credit rating of 2.3 based on total fair value and 2.9 based on total principal amount as of March 31, 2024.
• As of June 30, 2024, we had three debt investments in one portfolio company on non-accrual status, with a combined fair value of approximately $0.5 million. Also, as of June 30, 2024, our preferred equity investments in one of our portfolio companies were on non-accrual status, which had an aggregate fair value of approximately $2.5 million.
• For the quarter ended June 30, 2024, we issued a total of approximately 2.9 million shares of common stock pursuant to an “at-the-market” offering. After deducting the sales agent’s commissions and offering expenses, this resulted in net proceeds of approximately $8.9 million. As of June 30, 2024, we had approximately 62.7 million shares of common stock outstanding.
  

We will hold a conference call to discuss second quarter results today, Tuesday, August 13^th, 2024 at 9:00 AM ET. The toll-free dial-in number is 800-274-8461, verbal access code OXFORD. There will be a recording available for 30 days. If you are interested in hearing the recording, please dial 877-710-5302.

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.

OXFORD SQUARE CAPITAL CORP.
STATEMENTS OF ASSETS AND LIABILITIES
		June 30, 2024				December 31, 2023
		(Unaudited)
ASSETS
Non-affiliated/non-control investments (cost: $397,523,375 and $440,069,822, respectively)		$	249,566,370			$	261,614,335
Affiliated investments (cost: $16,836,822 and $16,836,822, respectively)			2,543,665				5,276,092
Cash and cash equivalents			30,014,406				5,740,553
Securities sold, not settled			3,402,645				—
Interest and distributions receivable			3,274,499				3,976,408
Other assets			1,383,299				1,060,384
Total assets		$	290,184,884			$	277,667,772
LIABILITIES
Notes payable – 6.25% Unsecured Notes, net of deferred issuance costs of $427,349 and $543,609, respectively			44,363,401				44,247,141
Notes payable – 5.50% Unsecured Notes, net of deferred issuance costs of $1,575,975 and $1,768,219, respectively			78,924,025				78,731,781
Securities purchased, not settled			10,852,405				—
Base Fee and Net Investment Income Incentive Fee payable to affiliate			1,023,352				1,012,389
Accrued interest payable			1,204,487				1,204,487
Accrued expenses			1,405,182				1,163,349
Total liabilities			137,772,852				126,359,147
NET ASSETS
Common stock, $0.01 par value, 100,000,000 shares authorized; 62,705,628 and 59,300,472 shares issued and outstanding, respectively			627,056				593,005
Capital in excess of par value			468,341,856				458,121,381
Total distributable earnings/(accumulated losses)			(316,556,880	)			(307,405,761	)
Total net assets			152,412,032				151,308,625
Total liabilities and net assets		$	290,184,884			$	277,667,772
Net asset value per common share		$	2.43			$	2.55

OXFORD SQUARE CAPITAL CORP.
STATEMENTS OF OPERATIONS
(Unaudited)
		Three Months Ended June 30, 2024				Three Months Ended June 30, 2023				Six Months Ended June 30, 2024				Six Months Ended June 30, 2023
INVESTMENT INCOME
From non-affiliated/non-control investments:
Interest income – debt investments		$	7,021,819			$	8,799,180			$	13,442,866			$	17,093,340
Income from securitization vehicles and investments			3,885,916				4,329,300				7,818,290				8,708,795
Other income			537,721				384,500				861,724				652,643
Total investment income from non-affiliated/non-control investments			11,445,456				13,512,980				22,122,880				26,454,778
Total investment income			11,445,456				13,512,980				22,122,880				26,454,778
EXPENSES
Interest expense			1,960,984				3,087,951				3,921,966				6,173,317
Base Fee			1,023,352				1,257,688				2,011,168				2,417,334
Professional fees			491,037				281,928				802,784				617,808
Compensation expense			174,482				190,159				381,380				457,124
General and administrative(1)			447,519				430,149				794,144				803,322
Excise tax(1)			(373,824	)			300,000				(48,024	)			300,000
Total expenses before incentive fees			3,723,550				5,547,875				7,863,418				10,768,905
Net Investment Income Incentive Fees			—				1,299,324				—				2,529,308
Capital gains incentive fees			—				—				—				—
Total incentive fees			—				1,299,324				—				2,529,308
Total expenses(1)			3,723,550				6,847,199				7,863,418				13,298,213
Net investment income			7,721,906				6,665,781				14,259,462				13,156,565
NET CHANGE IN UNREALIZED APPRECIATION/(DEPRECIATION) AND REALIZED GAINS/(LOSSES) ON INVESTMENT TRANSACTIONS
Net change in unrealized appreciation/(depreciation) on investments:
Non-Affiliate/non-control investments			30,353,371				4,900,785				30,498,482				3,957,995
Affiliated investments			(2,376,310	)			3,352,146				(2,732,427	)			4,072,635
Total net change in unrealized appreciation/(depreciation) on investments			27,977,061				8,252,931				27,766,055				8,030,630
Net realized losses:
Non-affiliated/non-control investments			(30,439,962	)			(3,331,308	)			(38,534,902	)			(3,331,308	)
Total net realized losses			(30,439,962	)			(3,331,308	)			(38,534,902	)			(3,331,308	)
Net increase in net assets resulting from operations		$	5,259,005			$	11,587,404			$	3,490,615			$	17,855,887
Net increase in net assets resulting from net investment income per common share (Basic and Diluted):		$	0.13			$	0.13			$	0.24			$	0.26
Net increase in net assets resulting from operations per common share (Basic and Diluted):		$	0.09			$	0.23			$	0.06			$	0.36
Weighted average shares of common stock outstanding (Basic and Diluted):			60,654,421				50,542,374				60,146,853				50,202,259
Distributions per share		$	0.105			$	0.105			$	0.210			$	0.210

____________

(1)      Change in prior periods was made to conform to the current period presentation.

FINANCIAL HIGHLIGHTS

		Three Months Ended June 30, 2024				Three Months Ended June 30, 2023				Six Months Ended June 30, 2024				Six Months Ended June 30, 2023
Per Share Data
Net asset value at beginning of period		$	2.42			$	2.80			$	2.55			$	2.78
Net investment income(1)			0.13				0.13				0.24				0.26
Net realized and unrealized (losses)/gains(2)			(0.04	)			0.10				(0.18	)			0.09
Net (decrease)/increase in net asset value from operations			0.09				0.23				0.06				0.35
Distributions per share from net investment income			(0.11	)			(0.11	)			(0.21	)			(0.21	)
Tax return of capital distributions(3)			—				—				—				—
Total distributions			(0.11	)			(0.11	)			(0.21	)			(0.21	)
Effect of shares issued			0.03				(0.04	)			0.03				(0.04	)
Net asset value at end of period		$	2.43			$	2.88			$	2.43			$	2.88
Per share market value at beginning of period		$	3.17			$	3.16			$	2.86			$	3.12
Per share market value at end of period		$	2.94			$	2.65			$	2.94			$	2.65
Total return based on Market Value(4)			(4.06	)%			(13.00	)%			9.98	%			(9.15	)%
Total return based on Net Asset Value(5)			4.75	%			6.61	%			3.53	%			11.15	%
Shares outstanding at end of period			62,705,628				56,395,751				62,705,628				56,395,751
Ratios/Supplemental Data(8)
Net assets at end of period (000’s)		$	152,412			$	162,412			$	152,412			$	162,412
Average net assets (000’s)		$	146,781			$	144,439			$	147,520			$	141,852
Ratio of expenses to average net assets(6)			11.15	%			18.96	%			10.99	%			18.75	%
Ratio of net investment income to average net assets(6)			20.04	%			18.46	%			19.00	%			18.55	%
Portfolio turnover rate(7)			5.69	%			1.48	%			11.08	%			2.60	%

___________

(1)      Represents per share net investment income for the period, based upon weighted average shares outstanding.
(2)      Net realized and unrealized gains/(losses) 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. The amounts and sources of distributions reported are only estimates (based on an average of the reported tax character historically) and are not being provided for U.S. tax reporting purposes.
(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 investment sales and debt repayments or year-to-date 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 six months ended June 30, 2024 and 2023:

		Three Months Ended June 30, 2024			Three Months Ended June 30, 2023			Six Months Ended June 30, 2024			Six Months Ended June 30, 2023
Ratio of expenses to average net assets:
Operating expenses before incentive fees		11.15	%		15.36	%		10.99	%		15.18	%
Net investment income incentive fees		—	%		3.60	%		—	%		3.57	%
Ratio of expenses, excluding interest expense, to average net assets		5.81	%		10.41	%		5.68	%		10.05	%

About Oxford Square Capital Corp.

Oxford Square Capital Corp. is a publicly-traded business development company principally investing in syndicated bank loans and, to a lesser extent, debt and equity tranches of collateralized loan obligation (“CLO”) 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. These statements are not guarantees of future performance, conditions or results and involve a number of risks and uncertainties. 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

FAQ

What was Oxford Square Capital Corp's (OXSQ) NAV per share as of June 30, 2024?

Oxford Square Capital Corp's (OXSQ) NAV per share was $2.43 as of June 30, 2024, slightly up from $2.42 on March 31, 2024.

How much net investment income did OXSQ report for Q2 2024?

OXSQ reported net investment income of $7.7 million, or $0.13 per share, for Q2 2024.

What distributions did OXSQ declare for the upcoming months?

OXSQ declared monthly distributions of $0.035 per share for October, November, and December 2024.

How much did OXSQ invest in new investments during Q2 2024?

OXSQ made new investments of approximately $28.8 million during Q2 2024.

What was the weighted average yield of OXSQ's debt investments as of June 30, 2024?

The weighted average yield of OXSQ's debt investments was 13.7% at current cost as of June 30, 2024.