LRFC - Earnings call transcript Q4 2021 | Logan Ridge Finance Corporation

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Logan Ridge Fourth Quarter 2021 Financial Results. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. today's being that advised be conference recorded. is Please Instructions]. [Operator turn over Liegey. to I would speaker conference to like Serena now your the for today,

You may begin.

Serena Liegey

Corporation's the available closed. earnings Relations press morning, Logan was distributed year Thank welcome XXth release along in release of Company's the earnings fourth after the March website Investor Finance market XXXX section An Good at full copy quarter Monday SEC. call. should Company's you. XX-K conference on and A with and Ridge conjunction with an Form with on earnings on filed www.loganridgefinance.com the presentation, reviewed and is be the in to

described Officer those not unless As statements results involve required filings may being risks in today's guarantees recorded no performance Actual I any a Finance or Goldthorpe, call statements forward-looking note a including is over Finance turn with such to the Please those and obligation forward-looking contain law. that uncertainties. result Ted. call a conference Ridge Please this a reminder, for call number Executive replay are forward-looking of to of to factors differ With results assumes ahead, like conference number Ridge future and Logan in Chief would by that, Corporation of of the SEC. Logan update the from Company's of purposes. now may Corporation. as materially which Ted the statements go

Ted Goldthorpe

summarizing Finance, Logan will off made start today Patrick to the marks quarter what am and Financial we and completed welcome Roos the Schafer. second and that progress quarter Officer, I as full I fiscal Chief ahead. year Officer, lies joined and Chief our the and morning Good our have call. fourth new to This Investment our XXXX by and year adviser our today Ridge earnings first Jason by

additional Jason through financials. and will will detail investment our Patrick the that, walk you provide Following on activity to-date

into to are and investments book by Company's the of debt secured the new exposure rotating Our out equity objectives first quality, delever adviser non-income-producing BC second, by proceeds the income-generating to immediate to optimize as higher those senior reposition And redeploying Partners. capitalization. originated and

interest we XXXX, Since successfully approximately portfolio the in portfolio the of of company’s million role generating part Logan successfully which proceeds six originated Management, the monetized we million $XXX by Partners XXXX investments the platform. repositioning the XX, portfolio having substantial exited of investment into legacy $XX.X through During we credit assuming earning July XXXX on investment progress equity have companies made can be inherited. as December investments Xst, adviser redeployed BC

redeploy that into three to interest Partners the credit repayments platform were company’s During continue generating be period million earning fourth and very we originated this XXXX. the new into we quarter in of $X will investments. proceeds commitments investment Originations can investments during exited and equity active capital by redeployed the BC

Since assuming same million approximately During net investments repayments quarter for of and $X.X the deployed in and sales of and adviser the in of approximately investment Management investments million million in had million XXXX the $XX.X XXXX. approximately we resulting million investments made interest quarter repayments sales deployment role Xst, and the $XX.X XXX company's XXXX in fourth of had of December through we've July during on XXst, earning by Logan originated the XX.X period.

portfolio our second portfolio X.X% lien was XX.X%, loan X.X%, and value first debt X, at of was lien a subordinated Slide were on see can the and obligations debt equity debt was XX.X%, fair to as XX.X%. decreased collateralized percentage you As

the reduction. we significant During risk year made progress in

quarter repaid notes and Facility the SBA KeyBank an outstanding which using quarter, senior a BBB long-term secured rating and of the of of XXXX during we debentures $XX the due second first received Following million repayment portion Credit refinanced investment fourth grade on of notes our the in full million $XX $XX minus. X.XX% million the and the during

debt total to the X.X to times of of XXXX. end ratio compared was times Our of as equity X at the XXXX as end

on our the We continue aiming XXXX work structure company's of capital to costs further to overall in optimizing will debt. lower

Our term to platform, the leverage BC base AUM longer Partners is to efficiencies. an drive operating goal entire

of So we XX% to stable of XXXX. level operating spreading million larger stabilized expenses across will far this as we a approximately expect in the asset $XX.X XXXX base compared investment portfolio. have to by And grow to we million reduced expenses and $XX.X to continue in trend as seek a

legacy the our In expected exact returns of rotation generating are that to benefit cash With call there's of the Slide the significantly analysis. on not and the out grade earnings high rotation I in to fourth non-income would to addition an quarter onetime Officer. longer Patrick income is I'll that from refinanced refinancing In assets days on predict non-income difficult. term were equity our we the through interest Chief believe Investment existing shareholders, like assets. Logan accretion our the of near term savings upon generating structure increase for term our term liability Schafer, in notes including that As or lower on pathway significant also expect rising earnings we of balance investment of and near both any from to the from in this to costs interest over ability million items presentation, expected benefit such timing X a of the turn cost the we incremental as but related portfolio of from the the is generating full extra rates in our XX Ridge longer the to positive that on any rotation sheet. $XX liability our income note of from

Patrick Schafer

more briefly Thanks activities on investment subsequent some I'll activities quarter-end. provide quarter fourth the and Ted. summarize to for details

The portfolio had companies to XX.X approximately X.X% which of XX.X period. of funded repayments in deployment resulting new million quarter During net in million the XX and quarter of made investment million company of approximately new was the for fourth XX.X approximately sales company end. the commitments as

company's portfolio of XXXX value investment the total consisted The portfolio of a companies of the XX, of As approximately $XXX.X investment fair portfolio approximately of had a million. XX.X% X.X%. XX yield value of represented debt with our fair which portfolio December

of As and we status investment $X.X fair of represented year-end of $XX.X two had on portfolio an aggregate cost amortized nonaccrual in with respectively. of of an debt that companies which value the remain million X.X% X.X% investments aggregate investments million and portfolio represented of XX% aggregate XX.X fair of the investment amortized September portfolio. million and debt This with compares an in non-accrual million to X.X company's status which the X.X% portfolio cost an XX, aggregate value on XXXX companies three and

on the investment quarter portfolio. the XX, During December XXXX, realized losses ended recognized of net million $X.X its company

the During net primarily exit driven recognized investment company's by nonaccrual ended we during a investment became zero adviser. was that XX, the of the September realized gains million. $X.X fourth XXXX, losses at XXXX realized the since quarter valid quarter of The been of the in company increase has

at in market in was caused fluctuations realized to loss the the values year investment The by which $XX market the and loss economy. of net conditions the portfolio. For they million XXXX, recognized company in our million and losses the the to realized realized full realized XXXX. in of $X change due were of changes compares in investment on on investments This our its portfolio net primarily

We to date, XXXX. XXXX immediate length, the In proceeds originated the as portion XX positions discussed debt borrowers of secured new aggregate, that to we redeployment previously by the borrowers. I'll our June BC million were have investments date Jason. made XX at we we high-quality now of investment across believe of beginning XX, proceeds new by all interest a senior or successful and As To of out portfolio made remains $XX.X in we exited progress have our and call on of of have were initiative of XXXX. of the Partners. turn have $XXX.X good objective and that in rotation this million over into offset portfolio the since earning substantial non-income-producing generated commitments

Jason Roos

Patrick. Thanks,

less Base September quarter. for the or XX.X% management million the investment for million the result XX, deleveraging ended declined XXXX, lower million year income primarily $X.X and the for quarter X.X% Total ago. expenses income compared a was financial million $X.X to million due due lower results of million ended for operating approximately the to year XXXX, our December was $X.X of company. financing ended of to which prior to investment the $X.X to assets average portfolio to of year to XX, decrease or smaller to $XX.X outstanding. XXXX, XXXX XXXX, XX, Turning increase than XX, for $XX.X total year, Interest investment December Total ended fourth represents Total income $X.X by year the ended a an a $XX.X decreased compared XX, $XX.X as the for December $X.X debt management. for declined mainly under compared million. for expenses XXXX, average million quarter to prior a which represents XX% year million December due to million fee the

XXXX. third nonrecurring Additionally, year $XXX,XXX $X.X Accordingly, or expenses during or compared per net of fourth per the the $XX.X XXXX share expenses and million income $XX,XXX share our investment of quarter was includes quarter of in during loss the $X.XX $XXX,XXX million for total $X.XX operating XXXX. to of of

driven quarter, ended $X.X realized the million of fourth by XXXX. on compares recognized portfolio of XXXX of gains our the for net we quarter previously $X.X the XXXX. increase losses losses September during in million XX, During zero exit This fourth realized nonaccrual at net was The of to investments. quarter XX, realized of that September investment a net primarily was the as valued

XXXX, in market was million they compared in overall were or the change due XX, market of as share on primarily as share investment at per $XX.XX December XX, the loss our investments was the of were to to we in values September Net which well the ended fourth million conditions per XXXX. -- $XXX.X realized realized as fluctuations of net year in the and $X NAV the primarily to as The investments the the million portfolio assets a realized per $XXX $XX.XX million losses decrease XXXX. During losses or compared portfolio losses in XXXX quarter $XX economy. by in changes on XX, year and at share unrealized during December ago. caused recognized net The to due

XXXX, $XX.X and million of in had cash equivalents. we As cash December XX,

notes debt Thus, XXXX, will we and at XXXX, X% due $XXX of the which balance year-end call million $XX.X XXXX times in of notes sheet, Ted a On due the XXXX, X.XX% senior liability notes KeyBank XXXX. XX, company's of due over back that offering, The total XXXX. of outstanding million to approximately October million X.XX% unsecured the this XXXX, notes had million Credit million which of at XXXX unsecured of XXXX, million used ratio we placement, during times compared comprised X% I of repaid we two to On outstanding. $XX.X outstanding, X% of year-end $XX.X senior X.XX% the proceeds private $XX.X of convertible XX, million XXXX. XXXX X.X due the redeem have million we million $XX Goldthorpe. issued was notes turn the the debt-to-equity investment remain $XX With $XX from of at due December we that, notes side to the fully on Facility rated was outstanding $XX grade. The will of due

Ted Goldthorpe

quarters will In management lower quickly deleveraging, capital concludes we look Jason. forward the operator to more long-term progress. recently support. company remarks. headway Thank a have your now improving This portion any cost. coming We turn a the make closing, prepared refinancing capitalization, by call questions. Thank significant debt you most to for with in made I you, our the and as assuming we since over of of continue for providing updates to our significant

Operator

Instructions]. [Operator you. Thank

Christopher the Our first comes question from of Ladenburg with Nolan line Thalmann.

Your line is open.

Christopher Nolan

the CLOs Is cash or have that what's on a on XX% Hey which guys. yield. roughly the XX-K, yield you JMP the there? going have In that

Jason Roos

period. the on yield calculated accounting methodology. interest like calculated future like positions the to investments, as beneficial yield CLO be the of result underlying you know, would of as on subject essentially are a for that the IRR the equity that kind that -- guess anticipated I And Yes, is cash equity flows

Christopher Nolan

Okay. that And expect XXXX, to is XXXX on XXXX, we should the that investments books stay those like -- the on for maturity long?

Patrick Schafer

as not No, I stated Patrick. period, that probably to think we Hey Chris, assuming would it's life. absolutely kind off that of No. of over is, like likely the nothing more is reality something it an I think runs XX maturity do that. expected XX month the

Christopher Nolan

May? I current debt lower your you costs, issuances And think know got the Great. can do you maturing debt given in then market you've conditions, two really

Patrick Schafer

Yes. do. small it's you just that’s There's we I a mean, secured. think the undrawn KeyBank if about would very importantly, existing structure, -- yes, kind I that I think mean, small unsecured. be of obviously facility entirely

minimum, at a should reduce our capital too we think much unsecured swapping without secured So for cost doing effort. of borrowing

absolutely we of capital. the cost think can yes, reduce So do we

Christopher Nolan

So with revolver? your you'd probably be this financing

Patrick Schafer

mentioned we think look a put substantial the before, would I to place larger, existing in KeyBank than more we've revolver facility. longer-term

Ted Goldthorpe

Yes.

to So always to flexibility. balance like like we trying try cost yes, with of we -- capital are balance always

bank I obviously, Patrick the and mix said, you change as the of some on to unsecured them your So debt, see between have give think you'll and but financing, secured line. lowers cost security

Christopher Nolan

in get will I Okay, you. queue. Thank the back

Operator

Instructions]. [Operator you. Thank

comes question from of the line with Steven Martin Slater. next Our

open. is line Your

Steven Martin

Hi guys.

Ted Goldthorpe

are Hey Steve, you? how

Steven Martin

Good, simple question changed, moving is I today interest lot about if you in cap pieces what A that QX, what it's of like of would were you couple Can your to hard exactly guess, there questions. look QX? -- a in and were expect is structure good. talk it nothing expense

Ted Goldthorpe

Yes.

interest did So go mentioned Jason simplistically, of and if approximately think absolutely I XXX,XXX. expense again, think we had I XX extra would say, I it's would that an away, in we QX, nothing days

Jason Roos

yes. XXX,XXX,

Ted Goldthorpe

reduced XX by at that XX -- we like that then refinanced. And was probably on basis our least that points something cost million XX million extra

but other do the So no there, changes. that's, if you absolutely kind assuming again, of math

Steven Martin

about gone on reinvestments, of before what's e-support and QX talked repayments, what far talk the portfolio and downs? with and potential you so you. about you see terms Ridge Can in Got Logan you've heritage pay

Ted Goldthorpe

with through our quarter in market, of I'd at XXXX consistent back here. say lot Yes. an from speaking, period generally kind time. pulled of year of or active being either XXXX the with experience the and a first Look, activity up consistent extremely Portman say I'd XXXX was And was last pulled of

I'd a we've on of lower still had been active, just -- where as in deployment a general taken quarters it's But over lighter the activity slightly two management. So say slightly little at QX rate. XXXX comment, to at relative bit and a repayment we it's the a

Steven Martin

had some been fund or expect of you you will Well, delayed fundings. $XX having the Should we the on books, and QX I call, that million repay? had on cash net you understand Portman net

Patrick Schafer

to XX this little we know get given that more in that lot lot little a a I we I commitments drawn bit of that quarter, a have a days also that generally but only it's made the have sounds think say we a we've have quarter. -- bit too speaking during early of because

today little are a it's for going even where tough to up bit how quarter. say we the So sitting to end we're

Ted Goldthorpe

of that say coming maturities we in months. a have also I'd do some couple up

as And off so debt to new well investments. be as the cash pay can used make

Steven Martin

Alright, Absolutely. you much. very thank

Ted Goldthorpe

Thanks.

Operator

call back to I Thank the turn you. over for like closing remarks. would to time, now this At Ted

Ted Goldthorpe

dialing to at today, you your look and of all again you end Thank all quarter. speaking to support. first for for we forward our all in Thank you Thank Great. you. the

Operator

gentlemen, Thank this Ladies you for participation. conference today's your concludes call. and

You disconnect. may now

Logan Ridge Finance (LRFC) 16 Mar 222021 Q4 Earnings call transcript