PTMN - Earnings call transcript Q2 2018 | Portman Ridge Finance Corporation

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Operator

Good morning, ladies and gentlemen, and welcome to the KCAP Financial conference call. An earnings press release was distributed yesterday.

If you did not receive a copy, the release is available on the company's website at www.kcapfinancial.com in the Investor Relations section.

As a reminder, this conference call is being recorded today, Thursday, August 2, 2018. This call is also being hosted on the live webcast, which can be accessed at our company's website at www.kcapfinancial.com in the Investor Relations section under Events. that forward-looking to projections, filings these KCAP SEC important includes that we with projections. call results for refer actual you Financial's factors conference statements materially and and ask the to Today's differ cause from could most recent law. KCAP by undertake unless not does update its Financial statements forward-looking to required I would for host Mr. conference, now today's introduce your Dayl Financial. Pearson, President and Chief Executive Officer of KCAP Mr. may begin. you Pearson,

Dayl Pearson

then results. and joining our a will Good who our call morning the the operating thank review I for XXXX KCAP balance second Officer, financial to Financial open questions. for for you. more of from Overall, for our Gilpin, our position you to we've key and Thank you costs, then on borrowing review of sheet of lower Financial the thorough review to will and quarter our activities the highlights strategy ourselves continued line results Today, provide our will all Chief Ted and optimize turn and execute overall over I quarter. quarter, for the growth.

offering relatively expected performance competitive has the quality where flat have we market deploy led on as judge spread to high capital to higher quarter, which the was transactions The risk. commensurate we is competition due around quarter Second market transactions as compression and well in professional yield prior not fees. mainly than to compared to was environment elected not with the

our in lot has liquidity we in portfolio a that the portfolio work of result, forward. assets, with result flexibility continues been we have quality industry and have seen a sharp slower of a increase anticipated, vigilant a strong. little to our nonaccruals, put As we than capital to have very while been the actually Whereas, the good credit strong of we path wider

sources of Let on me liquidity. briefly our touch

recall, $XX remains million $XX will undrawn. of credit a we million you which approximately As have line of

approximately of powder million. current cash $XX dry million $XX so on is We hand approximately also have our

us assets. with we out Our of ability placeholder to source although some of sell additional rotated the an yielding loans most legacy of of provides liquidity, our lower have

to our invested KCAP performing million And to owned is venture fund as the fully the by do is and joint liquidity joint to managed and close not Turning expected. by we venture, discussion, have $XXX - out support the there the additional that we But upsize do need have to to we fund and there assets create choose we the that enough if first, order make potential to to upsize. liquidity. sure are

second level a financial you highlights let quarter over Ted. before to our of give Now me handing summary high

For the basic second was quarter, income our NII for the months per was or approximately million share. per share. six net investment $X.X $X.XX $X.XX

months estimated six taxable distributable per $X.XX Our the was income share. basic for

during Asset Affiliates the Turning of - quarter. to performance the of our Manager our second performance

the portion for We second first are the a one from in market assets new called the CLOs to of warehouse, using significant quarter quarter. fund we a began the was which in Catamaran of fund a that to

had we same funds to was robust, end end distributions with in quarter, which further the to to risk intended The redeploy Our investable we as second generate to At the that quarter. of $XX shareholders. flow approximately distribution for the especially $X.XX, be of first the new need we cash million CLO market as quarter cash, transactions continues retention.

was in mark-to-market in market sorry. the with average on weighted XX, debt the the for the our XXXX, XX, June securities fourth fourth mark quarter - consistent par quarter, our of As

our value weighted average portfolio, similar the quarter. In mark-to-market our was terms first XX, to CLO of

there done we see life With while a future. this the the trying have or resets, are CLO of year. existing potential we funds. near extend is the in to $XXX And will new we could close million We do of more, in two always which currently in our assets reset already which another have additionally fair to amount warehouse,

when our to We updated are they continue made. you keep will decisions

prospective of approximately assets CLO billion management, Affiliates The ownership and upon XXX% AMAs additional redeemed flows. the X.X outstanding, Our Asset one the in Manager under cash $X.X the $XX.X additional million of currently is assets approximately have X.X with with management - under plus warehouse. valued all and based

was of portfolio. securities the portfolio end loans CLO million. of approximated represent Secured quarter, represented debt XX% the $XXX of stream the management At the XX% the make $XX current Our and on million All the our our to at periodic be This second our Affiliates quarter debt second investment valued allows of end to which managed approximately to CLOs by portfolio. AMAs distributions us. continue income from fees. securities distributions equity - Asset them about Manager

there second a to of quarter, the $XXX,XXX distributions $XXX,XXX, estimated totaling During approximately is return of were which capital. be

in to and value Additionally, par invest of our as we seeing of loans had XX, in under is loans. liquidity June syndicated terms the substantial that continues $X.X is what strong be and markets to AMAs assets both there middle-market billion economy are of Overall, economic performance, approximately in relatively management.

structures issuer As transaction result, friendly. remain a

Ted stockholder to are to I'll of create cyclical details open that to to while concern. returns consistently a quarter value. shareholders. also now put walk generate we to minded avenues focused Again, are and and We which We continue that this looking our for reshaping see through numerous for work portfolios Gilpin industries, ask our transactions was capital And the flat, the on in is opportunities we financials. generate value remain

Edward Gilpin

Thank morning, you, everyone. Dayl. Good

XX, As net value of with of compared XXXX $X.XX XX, June stood asset December at as $X.XX XXXX.

$X was our share investment income mentioned, XXXX. quarter ended Net income the was basic second $X.XX $X.XX or months for share. just the June XX, million six XXXX basic or investment Dayl for As $X.X per per net million

million six of $X.X basic While ended our share. XX, our estimated June for taxable the Interest securities share $X.XX of quarter distributable the million debt or of per on second per income quarter first XXXX. per income $X.XX XXXX for $X.XX the share the share per in $X.X XXXX compared Interest months for $X.XX with on was income $X.X million quarter or was securities was or XXXX. debt

for share, distributions the second unrealized during million from which $XXX,XXX in second per million million reported of $X.XX accounted $X.X Asset total. the million contribution the AMA or Affiliates XXXX, on with quarter per to Affiliates portfolio total to of the and Investment $X.XX on funds $X.XX per share quarter the was XXXX quarter CLO second equity second or of quarter Asset be investment to of to CLO return our XXXX. $X.XX share $X.X capital. share income losses share the in 'XX We per $X.XX which compares or portfolio per quarter from securities is quarter the on XX% We second that positions or experienced distributed The of $X.XX income capital. of XX%, XXXX, for of basic from first quarter first XX% per return debt of or decreased second quarter per securities all was per which Our the of and for the $XXX,XXX $X.X or Manager and of XXXX. for 'XX the approximately $XXX,XXX share $X.XX $X.X estimated or in $X.XX which of of share in quarter $X.X million the or - in Manager share received

$X.X months or ended million by compared the per six of XXXX. ended million three share months per $X.XX expenses per or were XX, months expense. attributable as investments $X.XX the June realized primarily or share June approximately and XXXX, approximately decrease same $X.X lower unrealized XXXX total compared for XXXX to company recorded period share on for losses to in $XXX,XXX the net losses realized six June the with ended approximate interest the net unrealized XX, For in XX, The and $X.XX

liability par with we approximately balance June On of sheet, as of weighted a side rate interest XX, outstanding of approximately value X.X%. the average million of our $XXX.X had XXXX, borrowings

Our asset of compliant quarter was XXX%, for minimum BDCs. XXX% at the coverage with requirement ratio current end

passed leverage XXXX. effective can which know adoption of board in increase and of their has the approved become KCAP's under will BDCs a leverage, March newly statute you new As the

publicly However, more we ratios call would to the KCAP to flexibility restricted of significantly turn new have shareholders. ability asset by these be any approval for our still course, in the would increase debt. over once of existing requisite its us that now With you give cover our traded to leverage like invest Operator? outstanding to in covenants But we questions.

Operator

Instructions]. [Operator

comes Paul The Johnson first from of question call KBW.

Paul Johnson

I see outstanding the that any next My around the you wondering September the around thoughts year. the first two, - that effective And I or obviously is callable with to could larger have if do you that goes call question approach have priority? on you what whether with thoughts do any Do of date date, guys it's for have as those guess, I has after you you that outstanding. the potentially, X:X that guess, bonds those. if you. leverage would not of have the I'm debt, March

Dayl Pearson

it's invested from I advantage now. attractive think is right fully in. those taking a of the going obviously, of And of leverage I where more even perspective increased in to a terms being attractive. we be are Yes, But, are function think, rate obviously,

call leverage something closer we where the that and bonds those a decision don't our we a we the refinance can we've with it assuming think probably to it's to I get is, today. cap we're where and credit would need So But at discussed make current level on them board point facility. to

us constantly upsize Our to group borrow see fairly we and friendly more? borrow that going lenders So to us we're from more them. lender are a asking when wants have

we're next we'll on or would a April on probably this have that. call in of clear rather I anticipate So path August year

Paul Johnson

write-down my if think anything Okay, manager, that in so. is second was I'm down wondering there thanks. just It's written million this it very around asset particular is to quarter And I - has in around drove anything... question do, $X the or helpful. there the

Dayl Pearson

Yes.

for them we that's think made to of a the risk and manager XX-X. asset had that fact XXXX-X for the financings loan into to of couple enter retention a reflective Catamaran I

CLO equity We historic CLO manager. things, equity financing which CLO Those our the one $X some outstanding, as And was by the the a paid particularly small interest have - the the month We entire which the than sort that - pieces, pieces, our we by debt, off with loan technical distributions all the month on the by strip, in three was the we there other still loan quarter - is equity LIBOR. reduced strip between a on had were of from fact which which spread impacted covered owned million. more equity. X% by debt. So all about the unwound a is and including asset

CLOs. chose of close borrow the to LIBOR borrowers something XX% of at and one our LIBOR to three think months have we month course I in

had term differential - point quarter basis that an impact XX narrows. those valuation, it short so that cash the flows itself the the in of the - anticipate which is of anticipate impacted equities. So We impacts We that reversing next the sort on will two. spread that or over course so

Operator

turn are to [Operator Dayl to the queue. no Instructions]. further the in more for like call I any remarks. back There would questions Pearson Mr.

Dayl Pearson

and we thank today. will you, third November. to be on speaking everyone you. quarter And call you Thank who the Thank was the in in early you

Operator

thank and Ladies concludes in This program. for today's gentlemen, today's participating you conference.

Everyone a You have disconnect. great may all day.

Dayl Pearson	President, CEO & Director
Edward Gilpin	Secretary, Treasurer & CFO
Paul Johnson	KBW

Portman Ridge Finance (PTMN) 3 Aug 182018 Q2 Earnings call transcript