Oxford Square (NYSE:SQ) Capital Corp. (NASDAQ:OXSQ) reported its financial results for the first quarter ended March 31, 2024. The company's net investment income was approximately $6.5 million, or $0.11 per share, a decrease from $7.8 million, or $0.13 per share in the previous quarter. The net asset value per share decreased to $2.42 from $2.55 in the prior quarter.
Total investment income for the quarter was approximately $10.7 million, down from $12.2 million in the prior quarter. Oxford Square experienced net unrealized depreciation on investments of about $210,000, which is significantly less than the $14.8 million in the previous quarter.
Realized losses were approximately $8.1 million, or $0.14 per share. Investment activity included purchases of approximately $12.1 million, sales of around $1.4 million, and repayments of about $17.9 million. The company also issued approximately 324,000 shares of common stock, resulting in net proceeds of around $924,000. Monthly distributions of $0.035 per share were declared for July, August, and September of 2024.
Key Takeaways
- Net investment income stood at $6.5 million, or $0.11 per share.
- Net asset value per share decreased to $2.42.
- Total investment income was about $10.7 million for the quarter.
- Net unrealized depreciation on investments was approximately $210,000.
- Realized losses were reported at $8.1 million, or $0.14 per share.
- Investment activity included $12.1 million in purchases, $1.4 million in sales, and $17.9 million in repayments.
- Approximately 324,000 shares were issued, with net proceeds of about $924,000.
- Monthly distributions of $0.035 per share declared for the third quarter of 2024.
Company Outlook
- Oxford Square Capital Corp. continues to focus on portfolio management strategies to maximize long-term total return.
- The company operates as a permanent capital vehicle, allowing for a longer-term investment strategy.
Bearish Highlights
- There was a decrease in net investment income and net asset value per share compared to the previous quarter.
- Total investment income and net unrealized appreciation on investments also saw a decline.
Bullish Highlights
- U.S. loan market performance improved versus the prior quarter.
- U.S. loan prices increased slightly and the distress ratio decreased.
- The 12-month trailing default rate for loans decreased.
- U.S. leveraged loan primary market issuance saw a significant increase versus the same quarter of the previous year.
Misses
- Oxford Square Capital Corp. reported lower net investment income and net asset value per share than in the prior quarter.
- The company experienced a decrease in total investment income and an increase in realized losses.
Q&A Highlights
- Additional information about the company's first quarter performance is available on their website.
- The company expressed gratitude for the interest in Oxford Square Capital Corp. and anticipates future communications with investors.
In conclusion, Oxford Square Capital Corp. faced some challenges in the first quarter of 2024, with decreases in net investment income and net asset value per share, as well as a decline in total investment income. However, the company benefited from improved U.S. loan market performance and an increase in leveraged loan primary market issuance. Oxford Square Capital Corp. remains focused on strategies to maximize long-term total return and has declared monthly distributions for the upcoming quarter.
InvestingPro Insights
Oxford Square Capital Corp. (OXSQ) has demonstrated a commitment to shareholder returns with a noteworthy dividend yield. As of the latest data, the dividend yield stands at an impressive 12.77%. This commitment to shareholder value is further underscored by the company's track record of maintaining dividend payments for 21 consecutive years, showcasing their stable financial policy even amidst market fluctuations.
The company's financial health is reflected in its market capitalization of $191.55 million and a price-to-earnings (P/E) ratio of 10, which suggests that the stock is trading at a reasonable valuation relative to its earnings. Additionally, Oxford Square Capital Corp. has been profitable over the last twelve months, a positive sign for investors looking for companies with consistent performance.
InvestingPro Tips indicate that while the valuation implies a poor free cash flow yield, the company's liquid assets exceed its short-term obligations, providing a cushion for operational needs or unexpected expenses. This is a crucial factor for investors considering the company's ability to sustain its dividend payments and navigate economic headwinds.
Moreover, Oxford Square Capital Corp. is trading near its 52-week high, with its price at 97.57% of the peak, which could be a sign of market confidence in the company's prospects. For investors seeking more detailed analysis and additional InvestingPro Tips, a visit to https://www.investing.com/pro/OXSQ would be beneficial. There are 5 more InvestingPro Tips available, offering a deeper dive into Oxford Square Capital Corp.'s financials and market performance.
Investors interested in the insights provided by InvestingPro can take advantage of a special offer using coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, enriching their investment strategy with valuable data and expert analysis.
Full transcript - TICC Capital Corp (OXSQ) Q1 2024:
Operator: Good day, everyone, and welcome to today's Oxford Square Capital Corp.'s First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note that this call is being recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Jonathan Cohen. Please go ahead.
Jonathan Cohen: Good morning, everyone, and welcome to the Oxford Square Capital Corp. First Quarter 2024 Earnings Conference Call. I'm joined today by Saul Rosenthal, our President; Bruce Rubin, our Chief Financial Officer; and Kevin Yonon, Managing Director and Portfolio Manager. Bruce, could you open the call with a disclosure regarding forward-looking statements.
Bruce Rubin: Sure, 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. 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 these projections. We do not undertake to update our forward-looking statements unless required to do so by law. To obtain copies of our latest SEC filings, please visit our website at www.oxfordsquarecapital.com. With that, I'll turn the presentation back to Jonathan.
Jonathan Cohen: Thank you, Bruce. For the quarter ended March 31, Oxford Square's net investment income was approximately $6.5 million or $0.11 per share compared with $7.8 million or $0.13 per share in the prior quarter. Our net asset value per share stood at $2.42 compared to a net asset value per share of $2.55 for the prior quarter. During the quarter, we distributed [indiscernible] per share. For the first quarter, we recorded total investment income of approximately $10.7 million as compared to approximately $12.2 million in the prior quarter. In the first quarter, we recorded net unrealized depreciation on investments of approximately $210,000 compared to net unrealized depreciation on investments of approximately $14.8 million in the prior quarter. In the first quarter, we recorded realized losses of approximately $8.1 million or $0.14 per share. In the prior quarter, we recorded realized losses on investments of approximately $270,000. During the first quarter, our investment activity consisted of purchases of approximately $12.1 million, sales of approximately $1.4 million and repayments of approximately $17.9 million. During the quarter ended March, we issued a total of approximately 324,000 shares of our common stock pursuant to an at-the-market offering, resulting in net proceeds of approximately $924,000. On April 25, 2024, our Board of Directors declared monthly distributions of $0.035 per share for each of the months ending July, August and September of 2024. Additional details regarding record and payment date 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 Yonon: Thank you, Jonathan. During the quarter ended March 31, 2024, U.S. loan market performance improved versus the prior quarter. U.S. loan prices, as defined by the Morningstar LSTA US Leveraged Loan Index increased from 96.23% of par as of December 31, 2023, to 96.69% of par as of March 31, 2024. According to LCD, during the quarter, there was some pricing dispersion with BB-rated loan prices decreasing 5 basis points, B-rated loan prices increasing 32 basis points and CCC-rated loan prices increasing 134 basis points on average. The 12-month trailing default rate for the Morningstar LSTA US Leveraged Loan Index decreased to 1.14% by principal amount at the end of the quarter from 1.53% at the end of December of 2023. We note that we have seen higher default rates amongst issuers of the type we invest in. Additionally, the distress ratio, defined as a percentage of loans were a price below 80% of par, into the quarter at 3.51% compared to 4.54% at the end of December 2023. During the quarter ended March 31, 2024, U.S. leveraged loan primary market issuance was $138 billion, representing a 163% increase versus the quarter ended March 31, 2023. This was driven by opportunistic activity, including refinancings and add-ons, while M&A and LBO activity remained relatively slow, but showed some recovery. At the same time, U.S. loan fund inflows as measured by Lipper for approximately $2 billion for the quarter ended March 31, 2024. We continue to focus on portfolio management strategies designed to maximize our long-term total return. And 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 the call back over to Jonathan.
Jonathan Cohen: Thanks, Kevin. We note that additional information about Oxford Square's first quarter performance has been posted to our website at www.oxfordsquarecapital.com. With that, operator, we're happy to open the call for any questions.
Operator:
Jonathan Cohen: Thank you. We'd like to thank everyone for their interest in Oxford Square Capital Corp., and we look forward to speaking to you soon. Thank you very much.
Operator: And this will conclude today's conference. Thank you for your participation, and you may now disconnect.
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