OFS Credit Company, Inc. (NASDAQ: OCCI) reported mixed results for its fiscal third quarter ended July 31, 2026, with non-GAAP Core NII rising 15% while net asset value contracted by 11%.

The company’s adjusted earnings per share of $0.21 missed analyst estimates of $0.23 by 8.7%. Similarly, interest income of $8.6 million fell short of the $9.4 million consensus. These misses reflect continued pressure on investment fair values and portfolio shrinkage.

Financial Performance

Net investment income (NII) fell to $4.2 million, or $0.14 per common share, down from $4.4 million in the prior quarter. The decline was driven by a smaller average investment portfolio at cost and lower interest income yields. However, non-GAAP Core NII rose 14.9% to $6.3 million ($0.21 per share), providing ample coverage for the company's quarterly distribution of $0.15 per share.

The company recorded a net loss on investments of $11.3 million, comprising $2.4 million in realized losses and $8.9 million in unrealized depreciation. This resulted in a net decrease in net assets from operations of $7.1 million. Consequently, NAV per common share declined by $0.40 to $3.32 as of July 31, 2026, compared to $3.72 at the end of the prior quarter.

Total operating expenses decreased by $0.4 million to $4.4 million, primarily due to a reduction in interest expense following aggregate preferred stock redemptions of $26.0 million during the prior quarter. Interest income fell to $8.6 million from $9.2 million in the previous quarter.

Portfolio Composition

As of July 31, 2026, the total fair value of the investment portfolio stood at $181.5 million, down from $197.4 million at the end of the prior quarter. The portfolio consisted primarily of broadly syndicated loan CLOs ($177.7 million) and middle-market loan CLOs ($3.8 million). The weighted-average effective yield was 11.67%, slightly up from 11.64% in the prior quarter.

The CLO equity cash flow yield was 14.46% based on amortized cost. The company made limited new investments, purchasing $0.9 million in CLO equity investments during the quarter, compared to none in the prior period.

Distributions and Capital Actions

The board declared monthly cash distributions of $0.05 per common share for September and October 2026. This implies an annualized cash distribution rate of 24.4% based on the closing market price of $2.46 per share on July 31, 2026.

Additionally, the company redeemed $5.0 million of its 5.25% Series E Term Preferred Stock on August 31, 2026, at 100% of principal amount. The asset coverage ratio for senior securities remained well above regulatory requirements at 209.1%, compared to 221.3% in the prior quarter.

What the Numbers Show

A significant divergence exists between GAAP earnings and cash-generating ability. While GAAP NII contracted due to portfolio shrinkage and yield compression, Core NII expanded by nearly 15%. This growth in Core NII was driven by an increase in cash flows from issuers making their first payments subsequent to initial investment, highlighting that operational cash generation improved even as fair values declined.

OFS Credit Company, Inc. (NASDAQ: OCCI) announced that its board of directors declared monthly cash distributions of $0.05 per share of common stock for both September and October 2026.

The CLO-focused investment company outlined the specific record and payment dates for these distributions below.

Dividend Reinvestment Plan Details

Common stockholders participating in the Dividend Reinvestment Plan (DRIP) can acquire additional shares at a 5% discount to the market price per share. This discount applies to the closing price on The Nasdaq Capital Market on the valuation date fixed by the Board for each distribution, which corresponds to the payment date.

Investors interested in joining the DRIP should contact their broker or financial intermediary. Further details regarding participation are available through the company’s investor relations portal.

About OFS Credit Company

OFS Credit is a non-diversified, externally managed closed-end management investment company. Its primary objective is generating current income, with a secondary goal of capital appreciation, primarily through investments in collateralized loan obligation (CLO) equity and debt securities. Investment activities are managed by OFS Capital Management, LLC, headquartered in Chicago with offices in New York and Los Angeles.