LRFC - Earnings call transcript Q2 2024 | Logan Ridge Finance Corporation

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Operator

Thank you. Good morning, and welcome to Logan Ridge Finance Corporation's Second Quarter Ended June 30, 2024, Earnings Conference Call. An earnings press release was distributed yesterday, August 8 after the close of the market. A copy of the release along with the 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-Q filed with the SEC.

As a reminder, this conference call is being recorded for replay purposes. uncertainties. conference of contain and future number risks today's are statements, involve that of guarantees not performance and note call forward-looking may which a Please or results in Actual the of results number including filings the factors, described of materially with may from the a forward-looking as SEC. a differ statements result in company's those those

and Investment Corporation; Executive Director of and today's will Brandon Chief Speaking Satoren, President, call Chief be Officer, Ted Patrick Financial Officer; Ridge Officer. Goldthorpe, Finance Schafer, Chief Logan

I Logan that, to ahead, the Corporation. With now would turn Chief go call like Goldthorpe, Ted Executive over Ted. Please Ridge to Officer of Finance

Edward Goldthorpe

Good morning. XXXX call. Welcome quarter earnings our to second

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

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

details Before our quarter. discuss few Patrick key on highlights like portfolio and provide Brandon the to to I would a and from more financials,

our make total originated by increase During the portfolio resulted of credits strategy the to second Partners towards legacy exposure the exposure our quarter-over-quarter. and steady quarter, reducing to in such increased equity the in we progress company's to a investment the platform. strategy income benefits The credit continue BC of

by last year. total investment compared and quarter the quarter same and to million previous $X.X Second quarter income $XXX,XXX increased the million $X.X as by to $XXX,XXX

per our we back to we third new investments of financial allowed dividend for doubled dividend, strength compared since on share of in in highlighting in first outlook credit underlying reintroduced the company's XXXX when portfolio took position earnings per has quarter remained placed of the and with quarterly our over declare distribution being company turnaround the story long-term to July power the the $X.XX of XXXX. share. The performance quarter distribution no the status has the and Additionally, company's a the quarter. has successful of during portfolio nonaccrual the of we declared almost Furthermore, the $X.XX the management strong

half see pipeline the we deploy in forward to XXXX, and our capital. our our available of Looking continue to to opportunities second attractive portfolio

activity open. pace up syndicated to picked deal and markets have remain continued New has the

EBITDA those $XX approximately $XXX the beginning than million both is our for $XXX of XX million raising alternative continued heavily market with private than compared of certainty borrowers greater provide, just and basis tailwinds approximately has EBITDA That private the EBITDA. points by EBITDA to to for million providers competitive $XX of of $XX for in million borrowers and resulting credit a capital syndicated for given to private spread Our industry. Having credit a spread According continued rely basis XX of for private activity points certain and parts market. have meaningful borrowers XX $XX led on to M&A over combination and year. private capital compression million and they our have said less for since compression [indiscernible] data, that, between the borrowers between the basis of of million points declined more credit spreads in

of We out maximizing legacy of remain of focused shareholder diligent the portfolio and value by earnings on leveraging deployment capital, continued investment the increasing through power sheet. rotation company's and balance the

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

Patrick Schafer

Thanks, Ted, and hello, everyone.

as exposure prior compares XXXX. of XX, and of of fair This $XXX.X value the portfolio June value Logan's $XXX.X fair to $XXX.X companies. to with was with the [ as XXXX, XX, June million of million XX quarter of a portfolio companies ] XX portfolio value portfolio companies a XX approximately approximately of fair As million

XXXX. strong quarter deployment million million June in our prudent million approximately sales, the approximately repayments and front, we strong, new of existing and quarter. resulting off second and quarter, deployment investments remain net for the to continue $X.X of ended quarter In the at of pipeline $X.X judicious of and XXXX, a quarter in while during $X.X opportunities sales on the During approximately be XX, deployed in specifically first we the new net coming repayments

Regarding portfolio company's platform. Partners -- at composition, by XX.X% portfolio in value investment June as of XXXX, portfolio the of XX, BC fair originated invested was credit the assets

excluding XX.X% debt As a XX% collateralized loan of at represented of total with a a XX.X% yield June XX, and fair approximately value, to approximately portfolio ]. XX, non-accruals investment average approximately fair This with the from average value compares as prior of collateralized of XX.X%, yield our and debt weighted XX.X% portfolio excluding as portfolio, loan which the XX.X%, XXXX, represented portfolio of a income annualized for weighted income total obligations. our of with June obligations XXXX [ weighted average of annualized annualized and at investment yield non-accruals quarter

collateralized Notably, excluding unchanged income and XX prior prior increased quarter points loan the obligations, average yield, from to remained basis as and compared while weighted the from non-accruals by the annualized year.

investment of to was March fair floating as XX, As XX.X% XXXX, at our bearing at of of XX, and XX, XXXX, interest ]. [ XX.X% as a portfolio June of XXXX debt XX.X% value June compared rates

value, fair to XX.X% a and and fair XX.X% the basis, of fair XX, of and June of on cost debt XXXX, cost portfolio lien fair total on portfolio at a lien represents our XXXX. compares XX.X% XX.X% cost and XX% our as a XX.X% XX, on As and XX, XXXX basis and [ This and XX.X% and respectively, cost value of value total of XXXX. a of first XX.X% XXXX, of portfolio The portfolio respectively, and XX, XX, compares June equity and represented portfolio total June the respectively. This March as of of basis as ]. first value as cost XX.X% to fair XX.X% March value basis, on our and of represented debt portfolio

status. nonaccrual to on Moving

unchanged from portfolio an call and fair remains had $XX.X the and and X respectively, company X million and first investments had -- at value XX.X% X.X% companies million, nonaccrual value, cost XX.X% the debt respectively. I'll X.X% fair value, and of investment XXXX, aggregate turn investments fair status companies across and portfolio cost XX, cost X million the respectively, of $XX.X and and Brandon. June of debt which investment and $XX.X X.X% cost or or X a with This fair amortized across the -- X.X% respectively. value, $XX.X million, quarter, portfolio's the to As with of now over on portfolio

Brandon Satoren

Thanks, Patrick.

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

the to other an professional $X.X higher million This nonrecurring XX, in million $X million by higher of the expenses largely as incurred compared prior generated ended a fees second $X.X to expenses June Logan investment financing as to prior million by $X $X.X $X.X as primarily due the per of quarter. compared the quarter well increased For XXXX, approximately for income, to the incremental was million Total as for $X.X and quarter operating or million quarter. average of increase costs, million outstanding of certain debt. share quarter $X.XX result as for

share a fees was during the from from or quarter $X.X the was million $X.XX in quarter due investment quarter decrease per quarter. income to the share, the the per $X.XX million for XXXX. Again, of million first of decrease incremental prior Our professional largely second $X.X $X.X or net non-recurring

representing to million as quarter, asset XX, share was to quarter share prior of share asset of XXXX, Our the million, a decrease $XX.X basis, -- $X.XX XX, March a of On as $XX.XX as representing June compared value compared second $XX.X was the a value net per as XXXX. of asset net million. per value per $X.X net $XX.XX as decrease $X.XX

$X.X decrease compared the to well of by realized and as the in million company's dividend million. net income as investment exceeding value was quarter-over-quarter The net the company's asset -- net losses $X.X the quarterly unrealized on company's payment portfolio driven as by

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

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

Edward Goldthorpe

you, Thank Brandon.

to now our over operator any to a call to our say just continued and concludes we big questions. turn This to shareholders, thank the Q&A, Before support. for prepared remarks, for you I'll go want your the I

Operator

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

Christopher Nolan

repurchases quarter? share the in Any

Brandon Satoren

not, the we'll unfortunately during hopefully but we as -- soon the look as we've running here. and been in weeks quarter, blacked can, couple next out up of to Chris, next get within that the

Christopher Nolan

and Sounds good. And between the then you also, run. BDC to beginning other align strategically, the a mean, aren't for Ridge Logan I merger stars

the Given, it basis dividend paying, now Ridge quite Logan significant. the price-to-book looks, on profitable, things is X discrepancy now with entities is still a but profitable, between valuation the like

Brandon Satoren

And about. are and is mean and between I thanks our Yes, both that it obviously naturally, that question. like also for we becoming something are thinking the asking Portland. portfolios say more more Logan -- I'd

on. I So think spot comment your is pretty

Operator

comes next of question line Instructions] [Operator Management. from Slater of Our Capital Steven the Martin

Steven Martin

Back questions. unrealized category. the Two to

You an unrealized Was something Did Was the across it this it loss had specific? quarter. something reverse? portfolio?

Patrick Schafer

of like business is generally a bit the Clinical Solutions. this has name company during hemp Florida bit the Florida challenging legalization there bulk year towards based and is a one cannabis and a sort year in the challenging little it, has American It's Yes. testing a working speaking, had The recreational election. of as year been of as

see this are companies they on area So in of kind with sort shakes to of back like where recreation. everything a lot pulling of out wait as spending

should even I we which everything think settled customers, a kind is spent. but help recreation through just putting be So kind environment will to the of aside, generally once bounce think -- and the their having and back election them more of consistently we to understood ultimately goes a company, that expect a sort for we pass, huge benefit there of more

one points, the kind company syndicated credit ]. Avanti broadly then that's of handful like a opposed was that a think second driver. and as mark-to-market the we loan biggest down a called loan, to and driven. that's It's moved a is Again, And anythings that's of one. [ So that

Steven Martin

keeps portfolio slight topic look was any the like in Major than the as in you. there is It positions? other doesn't always Got changes change and valuation some equity degree improving.

Patrick Schafer

that's generally No, right.

as are a know of within to looking benefit year I think exit that of for different the us a there number will do be here again, are in the companies So, portfolio course there themselves. a ultimately be hopefully this will as mentioned times, couple we -- of Logan market general over M&A

it $XXX,XXX about at [ environment or say be was went small have something fairly directly we're I actually playbook the number. $XXX,XXX, exit get it and that something we lot like other $XXX,XXX similar and where, to that. to one a a was relatively and small did our and a conducive. the marked try owners again, negotiated to of optimistic had of want We So will to sort U.S. of FIO ] market situations, we kind

So But we're that company was XX in transactions right of just relatively difficult given able macro with months, those XX in sort small. things that. of the engage engage thematically to now, where types again, to to been the of like probably last owners for it's where is the kind

are we by can get the able of transact optimistic a we're the different we -- of companies. our on equity those of done to end that hopefully, So couple the portfolio year. we're in And

Steven Martin

transactions. on of around Yes. they're have positions, that really some them while. a And of -- most been of young There research done most mean bigger There -- for are I are little having not a the a couple only whole matter. are ones. bunch the

Patrick Schafer

No, that's that and is was right. of the just in acquired [indiscernible] the largest XXXX. ones our going obviously Again, was -- down list largest

period. sort it's again, it's as grown X you can on up you're just And think pretty equity of So nicely. that our tell -- private from whole valuations, kind of a years about schedule coming of generally

name other time, also, some -- is time. same again, sponsor by for and it's I the been the for So been in and one, some owned the think which quite largest we've quite [indiscernible],

would a point So likely their yes, would kind be of the portfolios. they where from you at probably period perspective, would whole monetizing think be those folks

Steven Martin

Yes.

say other shares the And question, it a guess, it I what XX%, their than the this is yours. XX% Can moved Gladstone, as higher it's looks than on comment looked have Just have I holder, you quarter. higher it's equity they marked? degree like mark up substantially again when at, you same substantially, having who

Patrick Schafer

but they still actually I little ours. is I it perhaps $X.XX pretty Steve, yes, they substantiate small have perspective. relatively Yes, owner. we the share, something wrong, marked and we owner better down like do, their I'll have But but numbers try larger a than again, valuation we're are or and a our real they're like but at get quarter, from valuations Gladstone keep that are conservative mark at something $X.XX our think, a is equity this a we like information perspective, I meaningfully higher that. hopefully, and bit from a think until we than to think to

Steven Martin

right. All

the As caller, back I on urge route. share the previous to buyback get would you

Patrick Schafer

Of course.

Operator

Seeing in concludes to question-and-answer turn as questions the our there remarks. more back I session. now over the closing for call Goldthorpe queue, no are that will Ted

Edward Goldthorpe

great for any joining Hope to speaking us everyone, questions. quarter XXXX again today, we and we the in of out everybody us Thanks. you, and end reach summer November announced look forward has third to when with Thank a you results. please our to

Operator

Ladies call. and gentlemen, that concludes you for all joining. today's Thank

disconnect. now may You

Logan Ridge Finance (LRFC) 9 Aug 242024 Q2 Earnings call transcript