LRFC - Earnings call transcript Q4 2023 | Logan Ridge Finance Corporation

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Operator

Good morning, and welcome to Logan Ridge Finance Corporation's Fourth Quarter and Full Year ended December 31, 2023 Earnings Conference Call. An earnings press release was distributed yesterday after the close of the market.

A copy of the release along with a supplemental earnings presentation is available on the company's website at www.loganridgefinance.com in the Investor Resources section and should be reviewed in conjunction with the company's Form 10-K 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 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,

and Officer Officer; the call I today's Executive would With Goldthorpe, Logan Corporation; Goldthorpe, Officer, Ridge be Speaking call Schafer, Finance Ted Corporation. Director Chief Chief Chief on Logan Accounting will of Satoren, that, turn over Patrick Ridge Chief to like Ted go of Executive to President and Ted. ahead, Brandon Officer. Finance Investment Please

Edward Goldthorpe

Thank fourth call. you, year and good and earnings morning. Welcome to XXXX quarter our full

I mentioned, Chief our Schafer. As and joined I'm Brandon Satoren Officer, Patrick by Investment today

Brandon provide remarks, my will will details Patrick through and Following additional the financials. our investment on opening walk activity date to

start level highlighting year managing on ended income net investment began the reintroduce the investment has was a for to Ridge we're net quarter July Logan as income like well of since highest success XXXX. This as we XX, our XXXX by record able record as that trajectory performance the continuation XXXX. been annual quarterly largely to Logan investment for of -- I'd a we quarter income is of of reported the first positive company September since the in dividend

it Brandon detail benefit few exposure the company's highlights reflected shortly. the mind, and increased, prepared that brief I originated a in credits to by has Logan's will key results. limit its our shareholders continued exposure financial and comments on providing platform the clear With and Patrick has been and As keep today with more through to strong Partners decline to the has [indiscernible] has portfolio to BC credit been equity to

and brings company's Directors Board First and quarterly which share just quarterly increase first the declared increase the distribution, quarterly a of is increase to financial foremost, the fourth ago. company's approved from distribution the This year to for of quarter of represents the the $X.XX dividend it a per X consecutive $X.XX X% a distribution result performance, turned the per company's XXXX. we we share XX.X% when as

income the share, or an $X.XX $X investment loss a or represents the net December the increase XX, $X.X This earnings XXXX. December per million $X.XX capital redeploying net power the underscores and that for and BC of Partners XX, year portfolio $X.X originated ended enhanced platform. the income-generating portfolio into year million which compared was for monetizing of by the of non-yielding XXXX, result success a Our to credit we've ended our investment legacy had share million NIMs

the of company ended year undistributed $X.XX should $X.X per the company's million share, with quarterly spillover distribution. income which The or fortify

the that similar at Finally, program the new Directors current share repurchase was approved company's with March a in XXXX. share of terms repurchase established program of Board

a Since the the optimistic. NAV XX,XXX repurchased program. approximately entered the shares, company After which of since inception share introduction we to of the program accretive $X.XX has per through approximately strong cautiously year-end, XXXX is XXXX, the

increase in the the credit robust a continue market. our remains attractive in Given whole, private see pipeline broadly, in the we opportunities activity activity M&A to increase investment deal more and as and

into current Partners of the and to new advantage credit capital prudently remains market well to take platform deploy BC continue borrowers. XXXX, throughout equipped the we As conditions,

to will Schafer, Patrick Officer. With Chief that, I over our turn Investment the call

Patrick Schafer

everyone. hello, Thanks, Ted, and

companies $XXX.X XX XX Logan's a This value period companies with portfolio the compares December quarter same ago. of a of with XX, prior portfolio million of in value the to fair with year million portfolio the a XX value approximately As portfolio of approximately fair of of $XXX.X to XXXX, fair exposure and $XXX.X was of in companies. million

activity deal we continued XXXX, the lower the during year. ended the XX, During whole December deploy despite as quarter a to capital

Specifically, deployment million net million $X.X resulting approximately in the $XX.X and for in $X.X repayments company new approximately sales, approximately in of had million and the investments made quarter.

prove While we we continue to be attractive will and to XXXX believe vintages. particularly be disciplined and prudent underwriters, XXXX

our Now composition. portfolio to on

previously fair value the originated credit company's at was Ted by investment the invested noted, portfolio assets As platform. Partners in BC

value represented of of nonaccruals our from the a debt This with approximately portfolio of XX, prior and compares year. prior annualized XX.X%, excluding XX.X% our of investment obligations. weighted average approximately fair same income a a loan of average annualized collateralized XX.X%, at XX.X% and As yield weighted annualized average value income weighted as December yield to total period debt the portfolio for quarter, portfolio, loan and and XXXX, as a yield fair at from approximately nonaccruals investment portfolio XX% represented the obligations and which of of excluding collateralized XX.X% the

respectively. annualized weighted loan and and and points the XX basis points The XX to average increased yield, by from year, income prior quarter nonaccruals excluding collateralized obligations, compared prior basis

our December portfolio compared of XX, investment portfolio fair of XX, interest of and rate as of bearing floating XXXX, XX.X% as debt XX.X% XX, was a December of our XX.X% at XXXX, -- As value September to at XXXX.

representing of XX, of As and and and fair cost our portfolio XX.X% a September lien our value and our XX, debt XX, first basis, portfolio XX.X% represented on basis, as cost as a of on both on XXXX, XXXX. basis. XX.X% fair portfolio compares a December of of first lien and total and value XX.X% fair respectively, respectively, total to XXXX, of This XX.X% value total debt cost December

to the value fair The XX.X% December This portfolio the value on XX, nonyielding XXXX. XX.X% portfolio basis and fair equity cost compares as a XXXX. of of of a and XX.X% respectively, and and September as of cost portfolio on XX.X% represented XX, basis,

to on nonaccrual Moving status.

X.X% portfolio nonaccrual one X.X% or and aggregate and respectively, X new of at and on nonaccrual the X.X% the cost quarter portfolio status fair companies to of $XX.X $XX.X Accordingly, of value turn with a portfolio investment respectively. prior quarter, This companies the to or respectively, of respectively. of and added value XX, status there and X.X% of of cost over X million investment $XX.X an the is status. had company to During and nonaccrual company and amortized XXXX, fair I'll December million portfolio million, on of with cost value, the $XX.X million, portfolio's Brandon. call value, cost the now fair as fair and at compares

Brandon Satoren

Thanks, Patrick.

our to quarter now and financial for ended XXXX. the XX, Turning results December year

interest-earning as income, was for increase exiting as $XX.X credit the of For generated was year the Partners to $X.X the by which BC primarily million proceeds into Logan rate originated from by the equity nonyielding prior compared million platform base year. December ended redeploying increase driven $XX.X XX, as XXXX, received an million of investment assets well increases. The portfolio

million for for as prior operating $XXX,XXX as higher approximately expenses general increased year, to management and compared in well and Total XXXX interest as base driven financing million by decrease partially administrative fees $XX.X the expenses. by expenses, offset a to primarily by $XX.X

for year's made net increase investment million investment highlights or $X.X per of investment significant negative year earnings increase This Our strides company net the loss since share. $X.X share, from $X.X of was management with the million income has $X.X $X.XX Mount year-over-year adviser. as substantial the year share. spillover ended over previous net income Logan company took or in million per $X.XX per million the investment of the an or The $X.XX undistributed

placing portfolio net per due or income accrued the previously to a as a reported compared result $X.X million For interest million income was for of per the million or of share reversal nonaccrual to share, on largely investment in per quarter. quarter. or quarter, company of $X.XX a of $X.XX status the share The the $X.X prior of company $X.X fourth decrease $X.XX

a as Our $X the basis, share was to decrease value X.X% the prior X.X% per $X.XX XX, compared was share of quarter net $XX.XX XX, compared million. a to asset XXXX, December per as per net million, decrease asset December representing as XXXX. of value value a $XX.X On $XX.XX or at as per of or third million $XX.X asset quarter representing share net of share XXXX,

the value by value as driven our realized between net unrealized the decrease value compared decrease on losses to during in is portfolio in net like the was in that The I'd X.X% buyback decrease the asset per quarter. difference of to effect accretive and net the program. highlight X.X% the quarter-over-quarter share asset net share asset

decreased to buyback value Again, the million effect the per share net shareholders decreased the Compared prior between $X.XX X.X%. X.X% program. company's received difference decrease the and a Logan On XX, million, accretive by year is XXXX. net asset from $X.X value per or of of the from asset asset December net $XX value X.X% $XX.XX as the X.X% share or basis,

partially but on driven again to effect and of The the decrease realized share dividend a the portfolio, program. in on basis outearning was the by asset prior and net its unrealized relative per value repurchase net the company losses by year offset our share accretive

had of Credit quarter by as and platform. end, million investments cash equivalents BC capacity cash as deployment originated well Partners $XX.X the available borrowing of million Finally, for unused as company the in in $X.X

Ted. will With call now I back that, turn the to over

Edward Goldthorpe

Thank you, Brandon.

proud XXXX. I'll you our any . we've made shareholders, call to the to questions. of operator XXXX very and the To in turn continue are We progress our concludes strategy and the that prepared for our This continued thank support. in your execute over to now look forward remarks, for

Operator

Christopher Your Nolan first questions. question The Ladenburg Thalmann. with floor is of comes now from your open line Instructions] the for [Operator

Christopher Nolan

on XX,XXX Ted, date? your on new repurchases, to shares, is quarter first the comments that

Brandon Satoren

XX, that this that's That's is December not, XXXX. Brandon. through Chris, know

market shares. However, we've been active in have repurchasing continued and the

Christopher Nolan

dividend And and of coming leverage then the leverage to leverage be dividend for increasing and I question the quarters? the the forward. we on [indiscernible]. priority guess or keeping low Should with Or going the increased ratio increasing look in

Patrick Schafer

Chris. question, Yes. Good

leverage leverage expectation in distribution ideally, of taking this we a want increase and our our conservatively in as by levered. would and kind increase little our I are think But course equity comfortable portfolio leverage that up ideally a be is be historically, the of how income somewhat I the think course that would position operating to of would the investment year, mentioned we've driven sort bit rates. we the net we obviously over level anticipate to of be year, our over we'd and that

Christopher Nolan

And leverage of couple have assume you you environment take investment does because last that the up cautious? pretty been that quarters, improves guys that

Patrick Schafer

appropriate M&A the course credit we adding I assumption, I of year fairly that, yes, mean just don't adding market assets. been assets is an over Yes. -- general, private an that's so think the it's in I active have Having that which and the a increasing think said leverage intention markets. of I sake of think for far,

of have attractive opportunities. over seeing we're year this fairly course So and the seen

of sort like stands to feel capital think be originate be I as able attractive to mentioned. underwrite now, So to I opportunities we'll at where source, we deploy able least it and the

Edward Goldthorpe

Yes.

activity deal pipeline competitive from we've really last I got half like So little but a actually picked continue decent think -- has of think of up. it's And again, gotten to definitely continue are interesting. year more the second we that we investments new a recently,

Operator

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

Steven Martin

late I to you first the little Given more quarter about opposed comment so the to that quarter and you're you've ends, a in technically, care seen today, as would conceptually? what reporting guess, first numerically specifically

Edward Goldthorpe

I in we're finding want don't which and interesting read capital our I'd But provide the again, ending. it to deploy quarter we things say, some is just to yes, guidance to would comments, do. we're I I really because mean still previous continuing think just

Steven Martin

over on rates the the comment let's you the Can of new last or couple quarter? versus, investments say, of sort fourth today months on

Edward Goldthorpe

real loans think I basis you've doesn't probably points Logan other loan really months. Ridge, It in you've mean comeback. market time issuance Obviously, spreads XX the has the obviously year-over-year And but mean seen generically have it the credit. is really XXX% theme XX impact. year. in by I on to is about this I in reopened up affect a syndicated have for come more private new first had markets Yes. XX

higher yields with So people be little very of on for on are is the debt X.X% again, about longer, that's robust. bit bank double the coming lien pressure caused still and to markets have definitely leverage continue SOFR and a a the spreads. bit at But feel digits, down and and little in reopened, first better covenants

still bit. a is environment good us tightened despite it fact that have for So a little spreads the

Steven Martin

can lines, what on spreads you portfolio marks a have look to Would expect the you Along marks? to Okay. benefit tightening like? may those comment

Edward Goldthorpe

we a a when is lag. bit There's portfolio, Yes. versus a portfolio benchmarks how of so there's -- our the bit gets overlay continuing in obviously, valued, of credit we've the tightening and which a seen

and by have situations, company-specific large, absent tightened. So spreads

tailwinds of bit have broadly a should that So for, speaking, little valuations.

Steven Martin

the and change Okay. quarter and the there hasn't now the change, opened much And third market of a But quarter converting investments, hasn't markdowns. -- in from couple in slow. there that there of equity What are and residual a has the little business markups on doesn't some been fourth the of been third was know sort -- up much of I activity fourth right prospects those?

Edward Goldthorpe

Yes. I been repayments all-time basically to over XX at mean XX last have months the lows.

So repayment activity obviously, of this level said, year. a it's since low That like seen picked we've this never up XXXX. lot being

And quarter. smaller get a of up And out it's we're going third to low and on legacy working of hard little so, a yes, fourth this pretty like pick of really, bit. in some base and really to is larger This I the positions a stuff. number feel

Steven Martin

were that Are and amending benefits older extends credits? last one. some the there some a of All still extending right. you and fees getting couple noticed or amends, matured. I have from One On

Edward Goldthorpe

Yes.

amend and year big extend no a one refinance. was because So last thing could

as And as way covered, just extend, incremental so were way, incrementals. Usually, do though we're spread some getting well we even it amend -- fees. we and way, an when we so get

there amend I and really really, are because wasn't things months we and stuff ago. is only X, want to X, the on today the would X say option stay there a where refinancing extend credit

we're a we're really extending than are the to we stuff typically, the you'd is where So And stay stuff want do spreads in. deal. today able that wider be new to extending, when

just of or management company the times, compelling the pretty through they want lending with comfortable process people it's everything the lot diligence re-due like their team else. and is because to a having don't just of go group, So and

existing your paid is and with stand that. we lenders get easier, getting just oftentimes So for

Patrick Schafer

to said, though. Just on add to what Ted

the As come little spreads have a in he mentioned, bit.

to keeping just they effectively relative are So the deal where do same the a often situations spread could extra in is what there the economics new market.

getting what to but of being opposed we're facility as basis XX form typically new extra out pricing our in or where cheaper sometimes So or date. the spread fees at or the is our as keeping said, you that's points have refinanced capital you, actually to than with XX same

Operator

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

Edward Goldthorpe

thank in to Well, you, quarter when thanks, XXXX we much, speaking a we for us look announce forward everyone, very have to you joining again first Thank you and and today, weekend. May, and our good results.

Operator

call. conference today's concludes This

You disconnect. now may

Logan Ridge Finance (LRFC) 28 Mar 242023 Q4 Earnings call transcript