Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Logan Ridge Finance Corp (LRFC, Financial) reported an increase in total investment income to $5.4 million, up by $400,000 from the previous quarter.
- The company declared a third-quarter distribution of $0.33 per share, nearly double the $0.18 per share from the first quarter of 2023.
- No new investments were placed on nonaccrual status during the quarter, indicating strong underlying credit performance.
- The portfolio's weighted average annualized yield increased by 50 basis points compared to the prior year.
- Logan Ridge Finance Corp (LRFC) has a strong pipeline of new opportunities and continues to see attractive opportunities for capital deployment.
Negative Points
- Total operating expenses increased by approximately $0.6 million to $4.6 million, largely due to nonrecurring professional fees and higher financing costs.
- Net investment income decreased to $0.8 million from $0.9 million in the previous quarter.
- Net asset value decreased by $1.5 million to $88.7 million, driven by net realized and unrealized losses on the portfolio.
- The company had four debt investments on nonaccrual status, representing 8.5% of the investment portfolio at cost.
- Logan Ridge Finance Corp (LRFC) did not conduct any share repurchases during the quarter due to being blacked out.
Q & A Highlights
Q: Any share repurchases in the quarter?
A: Ted Goldthorpe, CEO: Unfortunately not. We've been blacked out during the quarter, but we'll look to get that up and running as soon as we can, hopefully within the next couple of weeks.
Q: Strategically, aren't the stars beginning to align for a merger between Logan Ridge and the other BDC you run?
A: Brandon Satoren, CFO: It is something that we are obviously thinking about. Our portfolios are becoming more and more alike between both Logan and Portland, so your comment is pretty spot on.
Q: You had an unrealized loss this quarter. Was it something specific?
A: Patrick Schafer, CIO: One name is the bulk of it, American Clinical Solutions. They are a cannabis and hemp testing business in Florida, facing challenges as the state works towards recreational legalization. We expect a bounce back post-election.
Q: Was there any change in the equity portfolio positions?
A: Patrick Schafer, CIO: No significant changes. We did have one small exit, US Bio, but generally, the M&A market should benefit us, and we are optimistic about transacting in some equity portfolio companies by year-end.
Q: Gladstone has their equity marked substantially higher than yours. Can you comment on this?
A: Patrick Schafer, CIO: They marked theirs down this quarter but it's still higher than ours. We prefer to keep our equity valuations conservatively marked until we have something real to substantiate from a valuation perspective.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
