Press Release

Press Release

Oxford Square Capital Corp. Announces Net Asset Value and Selected Financial Results for the Quarter Ended December 31, 2019 and Declaration of Distributions of Common stock for the Months Ending April 30, May 31, and June 30, 2020

Company Release - 2/26/2020 8:00 AM ET

GREENWICH, Conn., Feb. 26, 2020 (GLOBE NEWSWIRE) -- Oxford Square Capital Corp. (NasdaqGS: OXSQ) (NasdaqGS: OXSQL) (NasdaqGS: OXSQZ) (“OXSQ,” the “Company,” “we,” “us” or “our”) announced today its financial results and related information for the quarter ended December 31, 2019.

  • As of December 31, 2019, net asset value (“NAV”) per share was $5.12, compared with the NAV per share of $5.42 at the prior quarter end.
    • For the quarter ended December 31, 2019 we recorded GAAP net investment income of approximately $8.4 million, or $0.18 per share, compared to $8.9 million, or $0.19 per share for the quarter ended September 30, 2019.
    • We recorded net realized losses on extinguishment of debt of approximately $16,000 and net unrealized depreciation of approximately $13.3 million for the quarter ended December 31, 2019.
    • In total, we had a net decrease in net assets resulting from operations of approximately $4.9 million, or $0.10 per share, for the quarter ended December 31, 2019, compared with a net decrease in net assets resulting from operations of $33.1 million, or $0.69 per share, for the quarter ended September 30, 2019.
  • Total investment income for the fourth quarter of 2019 amounted to approximately $13.4 million, which represents a decrease of approximately $700,000 from the third quarter of 2019.
  • For the quarter ended December 31, 2019, we recorded approximate investment income from our portfolio as follows:
    • $6.3 million from our debt investments,
    • $5.6 million from our collateralized loan obligation (“CLO”) equity investments,
    • $700,000 of dividend income – PIK from affiliated investments, and
    • $800,000 from all other sources.
  • Our total expenses for the quarter ended December 31, 2019 were approximately $5.0 million, which represents a decrease of approximately $100,000 from the third quarter of 2019.
  • During the fourth quarter of 2019, we made additional investments of approximately $3.9 million and received proceeds of approximately $19.7 million from repayments and amortization payments on our debt investments.
  • As of December 31, 2019, 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 9.1% at current cost, compared with 9.7% as of September 30, 2019.
    • The weighted average effective yield of our CLO equity investments at current cost was 11.0%, compared with 11.9% as of September 30, 2019.
    • The weighted average cash distribution yield of our CLO equity investments at current cost was 22.1%, compared with 19.9% as of September 30, 2019.
  • Our weighted average credit rating on a fair value basis was 2.2 at the end of the fourth quarter of 2019, unchanged from September 30, 2019.
  • As of December 31, 2019, we had two debt investments on non-accrual status with a combined fair value of $5.8 million.
  • On February 24, 2020 our Board of Directors declared the following distributions on our common stock:
 Month EndingRecord DatePayment DateAmount Per Share
April 30, 2020April 15, 2020April 30, 2020$0.067
May 31, 2020May 14, 2020May 29, 2020$0.067
June 30, 2020June 15, 2020June 30, 2020$0.067

We will host a conference call to discuss our fourth quarter results today, Wednesday, February 26, 2020 at 9:00 AM ET. Please call 1-844-792-3730 to participate. A recording of the conference call will be available for replay for approximately 30 days following the call. The replay number is 1-877-344-7529, and the replay passcode is 10139666.

 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.

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

 December 31, 2019December 31, 2018
ASSETS  
Non-affiliated/non-control investments (cost: $467,828,907 and $486,232,755, respectively)$361,985,203 $430,496,633 
Affiliated investments (cost: $16,836,822 and $9,126,017, respectively) 2,816,790  14,492,197 
Cash equivalents 14,410,486  13,905,059 
Restricted cash 2,050,452  3,175,805 
Interest and distributions receivable 3,480,036  4,682,735 
Other assets 523,626  392,784 
Total assets$385,266,593 $467,145,213 
LIABILITIES  
Notes payable – 6.50% Unsecured Notes, net of deferred issuance costs$62,989,567 $62,664,863 
Notes payable – 6.25% Unsecured Notes, net of deferred issuance costs 43,313,872   
Notes payable – Credit Facility, net of deferred issuance costs 28,080,550  85,522,569 
Base management fee and net investment income incentive fee payable to affiliate 1,480,653  3,227,456 
Accrued interest payable 632,235  488,608 
Accrued expenses 771,174  517,470 
Total liabilities 137,268,051  152,420,966 
NET ASSETS  
Common stock, $0.01 par value, 100,000,000 shares authorized; 48,448,987 and 47,650,959 shares issued and outstanding, respectively 484,489  476,509 
Capital in excess of par value 451,839,302  456,970,560 
Total distributable earnings / (accumulated losses) (204,325,249) (142,722,822)
Total net assets 247,998,542  314,724,247 
Total liabilities and net assets$385,266,593 $467,145,213 
Net asset value per common share$5.12 $6.60 


OXFORD SQUARE CAPITAL CORP.


CONSOLIDATED STATEMENT OF OPERATIONS

 Year Ended
December 31,
2019
Year Ended
December 31,
2018
Year Ended
December 31,
2017
INVESTMENT INCOME   
From non-affiliated/non-control investments:   
Interest income – debt investments$28,000,283 $25,183,547 $24,561,956 
Income from securitization vehicles and investments 25,244,866  27,837,032  33,274,392 
Other income 1,694,434  2,984,773  3,198,469 
Total investment income from non-affiliated/non-control investments 54,939,583  56,005,352  61,034,817 
From affiliated investments:   
Dividend income – non-cash 7,710,805     
Interest income – debt investments   271,916  382,200 
Total investment income from affiliated investments 7,710,805  271,916  382,200 
Total investment income 62,650,388  56,277,268  61,417,017 
EXPENSES   
Interest expense 9,901,426  7,181,009  12,898,815 
Base management fees 6,704,467  7,309,435  8,140,010 
Professional fees 1,454,942  1,227,296  2,799,113 
Compensation expense 832,256  907,995  901,472 
Director’s fees 417,500  441,501  584,580 
Insurance 281,146  247,178  256,956 
Transfer agent and custodian fees 239,323  227,381  244,115 
General and administrative 829,476  644,104  1,014,580 
Total expenses before incentive fees 20,660,536  18,185,899  26,839,641 
Net investment income incentive fees 3,511,493  4,585,151  3,850,646 
Capital gains incentive fees      
Total incentive fees 3,511,493  4,585,151  3,850,646 
Total expenses 24,172,029  22,771,050  30,690,287 
Net investment income 38,478,359  33,506,218  30,726,730 
Net change in unrealized appreciation/depreciation on investments   
Non-Affiliate/non-control investments (50,107,582) (36,969,481) 19,478,902 
Affiliated investments (19,386,212) (2,323,867) 3,561,269 
Total net change in unrealized appreciation/depreciation on investments (69,493,794) (39,293,348) 23,040,171 
Net realized (losses) gains   
Non-Affiliated/non-control investments (1,709,816) (3,370,732) (7,007,892)
Affiliated investments   5,241   
Extinguishment of debt (72,666) (60,752) (3,149,338)
Total net realized losses (1,782,482) (3,426,243) (10,157,230)
Net (decrease)/increase in net assets resulting from operations$(32,797,917)$(9,213,373)$43,609,671 


 Year Ended
December 31,
2019
Year Ended
December 31,
2018
Year Ended
December 31,
2017
Net increase in net assets resulting from net investment income per common share:   
Basic and Diluted$0.81 $0.67 $0.60 
Net (decrease)/increase in net assets resulting from operations per common share:   
Basic$(0.69)$(0.19)$0.85 
Diluted$(0.69)$(0.19)$0.83 
Weighted average shares of common stock outstanding:   
Basic 47,756,596  49,662,157  51,479,409 
Diluted 47,756,596  49,662,157  58,349,224 


OXFORD SQUARE CAPITAL CORP.


FINANCIAL HIGHLIGHTS

 Year Ended
December 31,
2019
Year Ended
December 31,
2018
Year Ended
December 31,
2017
Year Ended
December 31,
2016
Year Ended
December 31,
2015
Per Share Data       
Net asset value at beginning of year $ 6.60  $7.55 $7.50 $6.40 $8.64 
Net investment income(1)(3)  0.81   0.67  0.60  0.52  0.66 
Net realized and unrealized gains (losses)(2)(3)  (1.49 )  (0.91) 0.25  1.62  (1.85)
Net change in net asset value from operations  (0.68 )  (0.24) 0.85  2.14  (1.19)
Distributions per share from net investment income  (0.80 )  (0.73) (0.66) (1.06) (1.14)
Distributions based on weighted average share impact   0.01    0.01  0.01 
Tax return of capital
distributions
   (0.07) (0.14) (0.10)  
Total distributions(4)  (0.80 )  (0.79) (0.80) (1.15) (1.13)
Effect of shares issued/repurchased,
gross
   0.08    0.11  0.08 
Net asset value at end of year $ 5.12  $6.60 $7.55 $7.50 $6.40 
Per share market value at beginning of year $ 6.47  $5.74 $6.61 $6.08 $7.53 
Per share market value at end of year $ 5.44  $6.47 $5.74 $6.61 $6.08 
Total return based on Market Value(5)  (4.14 )%  26.95% (2.01)% 33.29% (4.35)%
Total return based on Net Asset Value(6)  (10.26 )%  (1.99)% 11.33% 35.31% (12.73)%
Shares outstanding at end of year  48,448,987   47,650,959  51,479,409  51,479,409  56,396,435 
Ratios/Supplemental Data(8)       
Net assets at end of
period (000’s)
$ 247,999  $314,724 $388,419 $385,992 $360,935 
Average net assets (000’s) $ 289,373  $369,258 $385,947 $343,328 $487,894 
Ratio of expenses to average net assets  8.35 %  6.17% 7.95% 12.38% 9.80%
Ratio of net investment income to average net assets  13.30 %  9.07% 7.96% 7.80% 8.12%
Portfolio turnover rate(7)  12.75 %  35.18% 43.02% 25.73% 24.96%

____________
(1)  Represents per share net investment income for the period, based upon weighted average shares outstanding.
(2)  Net realized and unrealized gains include rounding adjustments to reconcile change in net asset value per share.
(3)  During the first quarter of 2015, the Company identified a non-material error in its accounting for income from CLO equity investments. Prospectively as of January 1, 2015, the Company records income from its CLO equity investments using the effective yield method in accordance with the accounting guidance in ASC 325-40, Beneficial Interests in Securitized Financial Assets, based upon an estimation of an effective yield to maturity utilizing assumed cash flows. An out-of-period adjustment to Net Investment Income Incentive Fees, in the amount of $2.4 million, or $0.04 per share, is reflected in the year ended December 31, 2015. Prior period amounts are not materially affected. During the quarter ended September 30, 2015, the Company recorded an out of period adjustment related to a miscalculation of discount accretion which increased interest income and increased investment cost, by approximately $1.4 million. For the year ended December 31, 2015, approximately $1.1 million, or $0.02 per share, of the adjustment related to prior years. The increase in the investment cost has a corresponding effect on the investment’s unrealized depreciation of the same amount. Management concluded the adjustment was not material to previously filed financial statements.
(4) 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.
(5)  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 per share, assuming distribution reinvestment prices obtained under the Company’s distribution reinvestment plan, excluding any discounts.
(6)  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.
(7)  Portfolio turnover rate is calculated using the lesser of the annual cash investment sales and debt repayments or annual cash investment purchases over the average of the total investments at fair value.
(8)  The following table provides supplemental performance ratios measured for the years ended December 31, 2019, 2018, 2017, 2016 and 2015:

 Year Ended
December 31,
2019
Year Ended
December 31,
2018
Year Ended
December 31,
2017
Year Ended
December 31,
2016
Year Ended
December 31,
2015
Ratio of expenses to average net assets:       
Expenses before incentive fees7.14%4.92%6.95%11.57%10.00%
Net Investment Income Incentive Fees1.21%1.24%1.00%0.81%(0.19)%
Capital Gains Incentive Fees%%%%%
Ratio of expenses, excluding interest expense, to average net assets4.93%4.21%4.61%7.37%5.73%

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 (“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. 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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