- Earnings call transcript Q3 2022

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Operator

Good morning and welcome to Logan Ridge Finance Corporation's Third Quarter Ended September 30, 2022 Earnings Conference Call. An earnings press release was distributed yesterday after the close of market. A copy of the release, along with supplemental earnings presentation is available on the company's website at www.loganridgefinance.com in the investors resources section and should be reviewed in conjunction with the company's Form 10-Q filed with the SEC.

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

to and Roos, Investment Speaking on like Chief Chief to would and Schafer, Chief President Financial With over be Logan that, Ridge now Chief Executive Ted Logan Officer; the today's of Goldthorpe, Finance Officer. Ted I Officer call Executive Officer, Ridge will call Director turn Corporation; Jason Patrick Corporation. Finance Goldthorpe, of

Ted Goldthorpe

Thank call. welcome and to earnings quarter XXXX you. Good our morning, third

I’m and mentioned, Officer, today Investment Financial Chief Jason our As Roos by Officer, joined our Chief Patrick Schafer.

begin will activity you company we will our of Patrick company. say of when Fast the in has through XXXX was its detail to my we like transformative half XXXX. the the be I evident walk of NII fruits company will back positive our our first our second opening of labor the that, to-date results, second Jason financials. during remind second provide investment significant pleased the told To the open, August that under for of for I'm reported milestone to the and to today, the would forward remarks, the a in company that quarter on performance quarter additional reported that, and to shareholders Following quarter stewardship,

and million substantially XXXX portfolio companies portfolio to over capitalize took in from capacity, facility current Ridge's environment, our arising portfolio hold ultimately and as are from we the $X.X growing increase with portfolio the to portfolio to million on September we on companies. portfolio financial overall the such credit credit last will new times performance. which de-risked, I exposure our and XXXX, laser-focused our like Logan that, details the that $X.X we managing July prudently size leverage credit our highlight we and achieve in current target additional we provide strong leverage diversity coming the we been will when Similarly, power quarters, which down our will remain our believe Accordingly, well-positioned our opportunities July vintage. XX XXXX. took to a of effectively have having our times, increasing improve our X, leverage, to XX growing having of believe as the increased credit September average over we further produce will ratio from and earnings companies to very portfolio when we believe on averaging Patrick While portfolio leverage X.X XX, current continue of is we - XX, attractive would X.X Further,

to will profitability. the to position dividend Patrick Officer. forward we return righted quarterly the As always of to I the our environment, current that Investment market. XXXX. on Chief moving To mind, our credit ship up I to be a remarks, With though, is our we the are that increasing company's portfolio reiterate impact the turn economic in quarter call company we would have in the Schafer, belief rising carefully cautiously that broader companies monitoring during will a are that, successfully With prepared management's like priority of wrap the my the paying optimistic top in and rates first over

Patrick Schafer

Thanks Ted.

value XX, portfolio September XXXX, As million $XXX.X approximately the of XX was portfolio companies. of our and of fair consisted

loan fair value a the basis XX.X% and compares company's portfolio and a of fair XX.X% total non-accrual on represent the both excluding compares and debt XX% basis cost debt obligations our This annualized on of a total from average respectively from a XX.X% cost lien First portfolio and denominator. This weighted represented respectively. total second XX.X% denominator of portfolio approximately yield and quarter At yield a income on our XXXX. total weighted approximately excluding of which non-accruals end, debt or of at represents average or annualized from portfolio and X.X% from as value value to investment the the collateralized our numerator of income had securities and numerator X.X% securities collateralized and of of and quarter. obligations X.X% debt portfolio debt at portfolio XX, excluding the excluding and fair XX.X% loan at December value when non-accruals our with the fair when end our non-accrual X% both

rising the benefit rate of environment continue of floating XX% our expect compared only to assets Ridge we forward, XX% are liabilities. to Logan to Going our rate as

quarter, the the portfolio. to the from judiciously During redeploy capital company legacy generated continued exiting

the of approximately Specifically, the an sales, with $XX.X and sales investments average quarter. million. as of investment our consisted $XX.X $X.X repayments net million investment in resulting value and XXXX September company $XX.X made million portfolio or and for of approximately approximately million fair investments XXX.X Thus, of in XX, companies XX approximately of portfolio repayments a million in size

of XX, as fair basis and improvement. respectively. equity the a cost December and XX.X% second XX, and XX.X% XXXX portfolio substantial on This as on the which compares basis And on XXXX, XX.X% value as of decreased cost portfolio a the portfolio to cost fair portfolio marks of a XX.X% and and the of non-yielding of of fair quarter. to value XX.X% value December Our and basis XX.X%

equity basis. reducing fair the on exited we our value, subsequent LLC a September fair non-yielding Additionally, quarter to the American Auto Group XX.X% Burke value portfolio Parts end, of at portfolio to further the XXth

had we no non-accruals. quarter, new the During

million by with million platform. as unused as deployment to turn XX.X in cash call well over will investments company the of the Jason. capacity I Additionally, for $XX.X the borrowing Credit available Partners ended quarter BC the now originated

Jason Roos

Patrick. Thanks,

our to September XX, the XXXX. results financial Turning for ended quarter

quarter costs improvement September ended was This XXXX. net in capital a reduction X.X for interest general in loss substantial quarter. represents reduction in and As was quarter and expenses. by Ted a increase million investment work structure a $XXX,XXX which legacy income This of income, $XXX,XXX and prior $XXX,XXX investment net $XXX,XXX XX, did the a mentioned, we income in the to investment recorded financing $XXX,XXX of driven the this we administrative largely by refinancing driven increase compared total

During Ridge's the quarter, investments, the to X.X almost on out. exit company which loss we where during realized of The former no was two quarter NAV was million. our in prior taken realized quarter portfolio with loss the as million Vology had on partially Inc we estimate reported the fair consistent by value impact our due a depreciation Logan were entirely unrealized portfolio offset of

$XX.XX XX, XX.X net share to $XX.XX per end million of share of quarter asset of As September our XXXX, compared second million value or as XXX.X at the per the XXXX. was or

million Finally, the have as to to quarter. back XXXX decreased to million Patrick XX.X September the turn mentioned, XX, over XX.X I cash and equivalents will of prior Ted. as to deployment attributable quarter, compared cash With largely the that, call as of throughout increased the

Ted Goldthorpe

Thank you, Jason.

company's turn you prepared for support. milestones operator and further the We are increasing remarks significant the your concludes the Thank have forward questions. any looking and will are proud our of for the now achieved I to-date over to profitability. call This to we

Operator

[Operator the Nolan first comes question from Instructions] line Christopher of from Your Ladenburg Thalmann.

open. is line Your

Christopher Nolan

items the any non-recurring quarter? Hey guys. Jason, in there were

Jason Roos

a numbers previous quarter of Thankfully lot normalization in quarters. this you see the from I will think

had last expense coming of mature So some through that off excess we quarter the on of multiple about we interest to XXX,XXX quarter. paid related having expense debt last

largely come that. we The down because have we and This expenses general don't our legal costs. administrative quarter have normalized have

of is quarter that winded deployment rate of - run way the think and benefit on are rate pretty long see revenue impacted So, of of no, that some this some the expense and a starting the side on quarter I during the the the saying to portfolio rise that you the good side.

Christopher Nolan

is XX back getting and with for you long where facility and thoughts you goes of profitability. road to everyone credit to credit what of it small. are given seems a do note it going that, this congratulations about that also leverage the think And be you. do million all to I lot to On cause what a is mean, Great.

Ted Goldthorpe

is Yes, Patrick. so, Chris, it hey

think So X.X to facility that if math, is top times range of think you to do as I of vehicle, to get decently leverage that kind think kind public we And you similar is. of the our in I times. the X.X kind other of the close

bit that on exits so we kind of kind our little some of over will with speed some period And is expectation the of sort like time a depend get that. things and there of which and

pretty close of million of facility kind range, facility on designed have, accordion the at theoretically and of of But leverage top for we we dollar we was of kind it point. upwards kind get could a that how would we to Additionally, that stated tap now at least hundred some our that to that originally.

Christopher Nolan

that you fair assume it future back, the the is know, And quarters? earnings, wind that back it Great. and your seems are profitability strategically, now in I we you to to that, have guess have going at the

Patrick Schafer

know, his our mean, more our, and as structure in with than increased rate obviously floating mentioned prepared I a I Yes, deployment rising you and have have Patrick assets we it expectation. question. debt. debt is floating we you is it mean, know, remarks, rates, obviously good our rate refinancing

to your to to know, our off expect factors So expense you profitability. tailwinds those all absent, a one question, have we

Christopher Nolan

could be forward some off? seems mean at I it going me rate completely somewhere thinking Because $X.XX sort am least that or that the run in facility. I to benchmark

Patrick Schafer

is benefit we I mean, as per other vehicles, LIBOR. when of lag get to a the there

think I So would more. we achieve to hope

that Let's put way. it

Ted Goldthorpe

Yes.

with the thing continue an the sort when from point particularly we other that going facility Logan and assets liabilities, all and we the kind think I around out refinanced on. here starting see in to on increasing May, of is, investments credit and of

ending quarter. average loss theoretically the of of So over a your is the than higher quarterly balance kind sort terminal

add So be equal rate environment of we quarters. kind as - from during else generally the speaking as well to be a both assets the benefiting adder continuing net all be should

Patrick Schafer

would and is just possible, on stock. relatively practically soon, material is, soon obviously probably the these would And makes versus continue for know dividend these Yes. as us your dividend be all to I it And earnings a and number as say, turn along token not I if two back But question. to a then this lines, buying dividend. sense we expect

we we well. to, are extent something able as thinking to And that that obviously the is are so about

Christopher Nolan

job thanks. Alright good guys

Ted Goldthorpe

Thanks.

Operator

Martin Your next line the comes Slater. of from question Steven from

open. line is Your

Steven Martin

guys. Hi,

and You sort the Portman quarter on versus some terminal having been velocity about of made just the comments obviously call.

You like else been? have would indication comparable what being had Can have all equal, color pro sort the some that you give forma of if number reset. of some us rates what looked would gave on

Ted Goldthorpe

kind in of bit mean, said, of kind range. that I a on more I it be potential everything XX-ish But that is cent would sort Portman. depending when roughly-speaking probably the probably kind Yes. of than resets, it again say increase. Obviously, but little would complicated of is

Steven Martin

rate about spread in related? talk of you related, terms your Can Okay. characterizing mark-to-markets related, NIM, credit

Ted Goldthorpe

Yes, then and negative. to credit were positive speaking credit related. rest I think mark-to-markets offset and opposed related, that had roughly probably we of was related, kind rate each of large as other the that both by two And kind the movement

on we first guess extra that each launch of of are companies for like exit a Sequoia negative Loan But else maybe we in think it Partners some The looking two My thought on think in much anything about is better other value there. quicker and all is positive part terms not we holders too to we process transactions. business. two the would collateral side, mark-to-market. good in But but minority million And LGS a and ultimately net Again where there the last a than of detail, timeline entering a lead should sale of is was you is holder even when roughly quarter. those as approximation on to detractors kind be perhaps then the some out. roughly have we $X of Silvers rest then really recovery the majority probably the

Steven Martin

question. a Got about, you. had talking were you I had The LJS actually

second there just you or performance based really, process? that quarter company markdown third to on big a was about the quarter. You from Was sale know what

Ted Goldthorpe

mindset to What know and about holders, incentives majority the process, we and of which are process. would kind sale I the the sale controlling say the

Steven Martin

Got you.

the in maturities do inherited you end of and terms terms In of repayments of the what see through year? portfolio,

Ted Goldthorpe

bigger based see positions, Yes, expect on little bit legacy to we have visibility, year portfolio the conversations of I we so with could far off think think but see, to tough before a companies, with pay a couple again, of is certain I been would having expect I it positions end. exact to kind you or have actually

just right month-to-month. bigger are are of year conditions market what I of and we a that point very by hearing move are, a quickly this given said, at can kind to where But couple positions repaid very, now that end obviously from we or that chunkier actually Now legacy is week-to-week that get rather. expecting

Patrick Schafer

really Yes. just working put we the other you I so mean, of hard will but in to to are legacy subsequent position reiterate, income mean, positions. and money the we out assets. we reinvest press that end, know, a release, I the thing, to we you get And will have equity quarter that see generating exited in

absent again, markdowns, will you will, we you see So which foresee. don't

chop that of as the grow You continue a will percentage debt the portfolio. overall we And kind exposure. equity of to see down portfolio

Steven Martin

advantage liquid securities, discussed here Can same you liquid of the same doing the Ridge? public securities. are the call, In at you thing do taking thing private you or Logan Portman or

Ted Goldthorpe

do answer is same yes, short The we the can thing.

little would do those we kind or a speaking, things facility credit of Portman those much wriggle say and exactly I similarly of do at different of But look advantage based on have markets. cannot that kind of a Ridge can how to facility. kind Logan of would the We Logan take yes, than a at to we a at bit of generally can adds we

Steven Martin

actually the this short forget Okay. you job And, People I around. controlled earlier how period it. great as of think time questioner have a how, turning

Patrick Schafer

progress saying place. that. with we right obsessed know, to would are, getting to possible, you Yes. are happen the as fast as Obviously like we appreciate you but Well, we I this

Steven Martin

Good. Thanks a lot.

Ted Goldthorpe

Thanks.

Operator

[Operator call Mr. Instructions] no the further time, There back to this you. questions are turn at Goldthorpe, Ted over I

Ted Goldthorpe

which Great. everyone to a our for results like again speaking you call, Well our full-year you and will but would next look today. wish quarterly to be us to on Thanksgiving. thank very joining early we We happy everybody forward

Operator

today's call. conference concludes This

now disconnect. may You

Logan Ridge Finance (LRFC) 9 Nov 222022 Q3 Earnings call transcript