Good day. And welcome to the OFS Capital Corporation Second Quarter 2022 Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference call over to Mr. Steve Altebrando, Vice President of Capital Markets. Mr. Altebrando, the floor is your sir.

Good morning, everyone, and thank you for joining us. Also on the call today is Bilal Rashid, Chairman and Chief Executive Officer of OFS Capital; and Jeff Cerny, the company’s Chief Financial Officer and Treasurer. Please note that we issued a press release this morning announcing our second quarter results and filed our Form 10-Q. Each of the documents can be obtained under the Investor Relations section of our website at ofscapital.com. Before we begin, please note that statements made on this call and webcast may constitute forward-looking statements as defined under applicable securities laws. Such statements reflect various assumptions, expectations and opinions by OFS Capital management concerning anticipated results are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from such statements. The uncertainties and other factors are in some way beyond management’s control, including the risk factors described from time-to-time in our filings with the SEC. Although, we believe these assumptions are reasonable, any of those assumptions could prove inaccurate, and as a result, the forward-looking statements based on those assumptions also could be incorrect. You should not place undue reliance on these forward-looking statements. OFS Capital undertakes no duty to update any forward-looking statements made herein and all forward-looking statements speak only as of the date of this call. During this call, we will be referring to non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with Generally Accepted Accounting Principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in the Investor Relations section of our website under the heading Tax and Non-GAAP Information. With that, I’ll turn the call over to Chairman and Chief Executive Officer, Bilal Rashid.

Thank you, Steve. Good morning. As you are all aware, we are in an uncertain economic environment, which has been significantly impacted by inflation, rising interest rates, a potential recession and continued geopolitical conflict. However, we believe we are well positioned both in terms of our portfolio, which is comprised of mostly floating rate, senior secured loans in defensive industries, as well as our balance sheet, which is primarily financed with long-term fixed rate debt. Historically, a rising interest rate environment has been beneficial to our net investment income. We have been very thoughtful about this positioning and we expect positive tailwinds from higher interest rates. At the end of the second quarter, as a percentage of fair value, approximately 98% of our loan portfolio was senior secured and is well diversified across multiple industries. Our largest sector exposures are in healthcare, technology, business services and manufacturing. Perhaps equally important is that we continue to avoid highly cyclical industries. Additionally, we believe that while interest rates have increased, compared to the historically low levels since the great financial crisis, we believe the cost of corporate borrowing still remains relatively low and manageable for our portfolio companies. We believe that our financing continues to provide us operational flexibility. At the end of the second quarter, 100% of our outstanding debt matures in 2025 or later, and 49% of our debt is unsecured. In addition, in June, we extended the maturity date of our senior loan facility by three years to June 2027. This facility is non-recourse to the BDC. Our corporate line of credit is flexible with no mark-to-market provisions. As you know, last year, we took action to lock in $180 million of fixed rate unsecured debt at historically low rates. We believe this was crucial to ensuring our strong…

Thanks, Bilal. Good morning, everyone. For the quarter we posted net investment income of $0.47 per share and excluding the reversal of previously accrued capital gains incentive fees, our adjusted net investment income was $0.24 per share. While our net interest income was up, our dividend income and fee income were both down, which can fluctuate quarter-over-quarter depending on portfolio activity. We took a cautious approach to new originations that generate fee income given the uncertainty and overall state of the economy. As Bilal mentioned, we believe there’s a path to an increased adjusted net investment income in the third quarter and the positioning of our balance sheet will increase the likelihood that our performance will improve in this rising rate environment. Our net asset value per share decreased to $14.57 from a historical high of $15.52 last quarter, largely as a result of rising spreads and yields in the credit markets. This decrease in net asset value was primarily driven by unrealized appreciation on credit investments, offset in part by an increase in certain equity investments. The decrease was in line with the Leveraged Loan Index during the second quarter. We had one subordinated loan that missed its interest payment this quarter, which was Eblens. They operate in the footwear and apparel retail sector, which has been especially impacted by inflation. This is one of two remaining legacy subordinated loans and we are in active discussions with the company regarding a restructure. We also had one loan where we opted to stop accruing our PIK coupon due to an unrealized decline in its fair value in the second quarter. However, it is worth noting that this portfolio company is current on another deaf tranche that requires cash interest payments. Prior to this quarter, we had not added a loan…

Thank you, Jeff. In closing, although, we are in the midst of an uncertain economic environment, we believe our company has several attributes that are working to our advantage. First, we stand to benefit from rising interest rates, given that the vast majority of our loan portfolio is floating rate and 63% of our outstanding debt is paid through. Next, we expect to benefit from our focus on capital preservation, with 98% of our loan portfolio being senior secured, the overall quality and fundamentals of our portfolio remain solid. Our financing is primarily long-term, with all of our outstanding debt, maturing in 2025 and beyond. In addition, almost half of our outstanding debt is unsecured. We believe that this gives us operational flexibility to execute on our business plan. Our longstanding experience continues to guide us through uncertain economic times. Since the beginning of 2011, OFS has invested more than $1.8 billion, with a cumulative net realized loss of just 1.9% over the last 11.5 years, while generating attractive yields on our portfolio. Lastly, we believe the size, experience and reputation of our advisor will continue to benefit our business. With a $3.5 billion corporate credit platform within a $30 plus billion asset management group our advisor has broad resources, including longstanding banking and capital markets relationships. Our corporate credit platform has gone through multiple credit cycles over the past 25 years. It is also important to reiterate that OFS Capital’s advisor has a strong alignment of interest with shareholders holding a 22% ownership stake in the BDC. With that, Operator, please open up the call for questions.

Thank you, sir. [Operator Instructions] : :

At this time, we are showing no question. We will go ahead and conclude today’s conference call. We thank you to the management team for their time today and thank you all for attending today’s presentation. At this time, you may disconnect your line. Thank you. Take care and have a blessed day everyone.