Oxford Square Capital Q4 2023 Earnings Report

Oxford Square Capital EPS Results

• Actual EPS: $0.13
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Oxford Square Capital Revenue Results

• Actual Revenue: $12.32 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Oxford Square Capital Announcement Details

• Quarter: Q4 2023
• Date: 3/15/2024
• Time: N/A
• Conference Call Date: Friday, March 15, 2024
• Conference Call Time: 9:00AM ET

Oxford Square Capital (NASDAQ:OXSQ) is a business development company, operates as a closed-end, non-diversified management investment company. It is a private equity and mezzanine firm. The firm invests in both public and private companies. It invests in secured and unsecured senior debt, subordinated debt, junior subordinated debt, preferred stock, common stock and syndicated bank loans. The firm primarily invests in debt and/or equity securities of technology-related companies that operate in the computer software, Internet, information technology infrastructure and services, media, telecommunications and telecommunications equipment, semiconductors, hardware, technology-enabled services, semiconductor capital equipment, medical device technology, diversified technology, and networking systems sectors. It concentrates its investments in companies having annual revenues of less than $200 million and a market capitalization or enterprise value of less than $300 million. The firm invests between $5 million and $30 million per transaction. It seeks to exit its investments within 7 years. It serves as the investment adviser to TICC. Oxford Square Capital Corp., formerly known as TICC Capital Corp., was founded in 2003 and is headquartered in Greenwich, Connecticut.

Oxford Square Capital Q4 2023 Earnings Call Transcript

Key Takeaways

• Net investment income rose to $7.8 million ($0.13 per share) in Q4 from $6.4 million ($0.11 per share) in the prior quarter.
• Net asset value per share fell to $2.55 at quarter end from $2.78 in the previous quarter.
• The company recorded net unrealized depreciation on investments of approximately $14.8 million ($0.25 per share), compared with $13.9 million of unrealized appreciation in the prior quarter.
• The Board declared monthly distributions of $0.035 per share for April, May and June 2024, consistent with its ongoing payout policy.
• U.S. leveraged loan market performance improved, with the Morningstar LSTA Index rising to 96.21% of par, although the 12-month trailing default rate increased to 1.53%.

[Operator]

Good morning, all. I would like to welcome you all to the Oxford Square Capital Corp. 4th Quarter 2023 Earnings Call. My name is Brika, and I will be your moderator for today's call. All lines are on mute for the presentation portion of the call with an opportunity for questions and answers at the end.

[Operator]

I would now like to pass the conference over to your host, Chief Executive Officer of Oxford Square Capital Corp, Jonathan Cohen, to begin. So Jonathan, please go ahead.

[Speaker 1]

Good morning, everyone. Welcome to the Oxford Square Capital Corp. 4th quarter 2023 earnings conference call. I'm joined today by Bruce Rubin, Chief Financial Officer Kevin Yonan, our Managing Director and Portfolio Manager and Jeff Fianza, our Senior Accounting Manager. Jeff, could you open the call with a disclosure regarding forward looking statements?

[Speaker 2]

Thank you, Jonathan. Today's conference call is being recorded. An audio replay of the conference call will be available for 30 days. Replay information is included in our press release that was issued this morning. Please note that this call is the property of Oxford Square Capital Corp.

[Speaker 2]

Any unauthorized rebroadcast of this call in any form is strictly prohibited. At this point, please direct your attention to the customary disclosure in this morning's press release regarding forward looking information. Today's conference call includes forward looking statements and projections that reflect the company's current views with respect to, among other things, future events and financial performance. We ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from those indicated in those projections. We do not undertake to update our forward looking statements unless required to do so above all.

[Speaker 2]

To obtain copies of our latest SEC filings, please visit our website at www.oxfordsquarecapital.com. With that, I will turn the presentation back over to Jonathan.

[Speaker 1]

Thank you, Jeff. For the quarter ended December, Oxford Square's net investment income was approximately $7,800,000 or $0.13 per share compared with $6,400,000 or $0.11 per share for the prior quarter. Our net asset value per share stood at $2.55 compared to a net asset value per share of $2.78 for the prior quarter. During the quarter, we distributed $0.105 per share. For the Q4, we recorded total investment income of approximately $12,300,000 as compared to approximately $13,000,000 in the prior quarter.

[Speaker 1]

In the Q4, we recorded net unrealized depreciation on investments of approximately $14,800,000 or $0.25 per share compared to net unrealized appreciation on investments of approximately $13,900,000 or $0.24 per share in the prior quarter. In the Q4, we recorded realized losses of approximately $270,000 For the prior quarter, we recorded realized losses on investments

[Operator]

of

[Speaker 1]

of approximately $3,700,000 repayments and repayments of approximately $800,000 We made purchases of approximately $3,500,000 during the quarter ended December for that period. During the quarter, we issued a total of approximately 1,300,000 shares of our common stock pursuant to an at the market offering, resulting in net proceeds of approximately $3,700,000 On March 14, 2024, our Board of Directors declared monthly distributions of $0.035 per share for each of the months ending April, May June of 2024. We note that additional details regarding record of payment data information can be found in our press release that was issued this morning. With that, I'll turn the call over to our portfolio manager, Kevin Yonon. Kevin?

[Speaker 3]

Thank you, Jonathan. During the quarter ended December 31, 2023, U. S. Loan market performance improved versus the prior quarter. U.

[Speaker 3]

S. Loan prices, as defined by the Morningstar LSTA U. S. Leveraged Loan Index, increased from 95.55 percent of par as of September 29 to 96.21 percent of par as of December 29. According to LCD, during the quarter, there was some pricing dispersion with BB rated loan prices increasing 56 basis points or 0.57 percent, B rated loan prices increasing 98 basis points or 1.01 percent and CCC rated loan prices decreasing 56 basis points or 0.7% on average.

[Speaker 3]

The 12 month trailing default rate for the Morningstar LSTA U. S. Leveraged Loan Index increased to 1.53% by principal amount at the end of the quarter from 1.2% at the end of September 2023. Additionally, the distress ratio, defined as a percentage of loans with a price below 80 percent of par, ended the quarter at 4.54% compared to 4.36% at the end of September 2023. During the quarter ended December 31, 2023, U.

[Speaker 3]

S. Leverage loan primary market issuance was $55,300,000,000 representing a 68% increase versus the quarter ended December 31, 2022. This was driven by refinancing activity, while both M and A and LVO activity remained relatively slow. At the same time, U. S.

[Speaker 3]

Loan fund outflows, as measured by Lipper, were approximately $500,000,000 for the quarter ended December 31, 2023, while outflows were approximately 14 point $3,000,000,000 for the year ended December 31, 2023. We continue to focus on portfolio management strategies designed to maximize our long term total return. As a permanent capital vehicle, we historically have been able to take a longer term view towards our investment strategy. With that, I will turn

[Speaker 1]

the call back over to Jonathan. Thanks very much, Kevin. Additional information about Oxford Square's 4th quarter performance has been posted to our website atwww.oxfordsquarecapital.com. With that, operator, we're happy to open the call up for any questions.

[Operator]

Thank you. We will now begin the Q and A session. We have a question on the line from Roy Josephson. Your line is now open.

[Speaker 1]

What can you tell us about the new non accrual status investment? Certainly. Thank you very much for your question. The non accrual is related to an investment in a private company, where we're not unfortunately allowed to disclose any further details beyond what's in the press release. Thank you.

[Speaker 1]

Thank you very much.

[Operator]

I would like to hand it back to Jonathan Cohen for any final remarks.

[Speaker 1]

Thank you very much. We'd like to thank everyone for their interest and for their participation on this call. We look forward to speaking to you again very soon. Thanks very much.

[Operator]

Thank you all for joining today's conference call with Oxford Square Capital Corp. Please enjoy the rest of your day and you may now disconnect your lines.