Logan Ridge Finance (LRFC) 10 Mar 232022 Q4 Earnings call transcript

Thank you. Good morning and welcome to Logan Ridge Finance Corporation's Full Year and Fourth Quarter Ended December 31, 2022 Earnings Conference Call.

An earnings press release was distributed earlier 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.

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

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

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

Good morning, quarter fourth and and welcome our year earnings full XXXX call. to

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

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

milestone marks of XX Management per is its dividend just months its quarter quarterly another fourth investment took the ago. The consecutive Logan marks significant company the Mount adviser Ridge Logan reinstating NII since and second $X.XX as at over for share positive quarter

believe buyback Furthermore, equity value both the Directors approved We program, which value income below a trades of our plan stock and will is continue asset company's accretive and share. one net year. million the share fair for investment per $X Board repurchase our to net

would capture short year to results quarter end we is period, and shareholders. our window between first our discount look for Although, earnings that our our

that stewardship. Logan the under the second you and be quarter progress second in had August we and evident Management would execution for To is first to of company's reported we a that results, significant year year. company said transformative the proud Logan's half the financials I'd reminding our We was that Ridge of the our when that priorities by strategic like what year for fiscal of achieved last during open, progress made are which XXXX, start very we on the full the management Mount during

announced capital successful of and just Eastport and the and cash the portfolio inherited had legacy debt successfully refinancing company. generated we from entire company's legacy company's we non-yielding the deployment where the substantial we in Notably, investment recapitalized a exited equity interest for Holdings the former refinanced adviser structure in

reported Fast forward company more quarter to the NII the quarter, consecutive to of of reintroduction triple prior today, led for the the positive second has NII quarterly quarter its in dividend. than turn the which fourth

investment making during our we exposure. portfolio Further, year, the to on of non-income-producing the substantial goal to progress took rotate the company's out equity reposition steps legacy

Specifically, at the represents respectively as total the of XXXX XX.X% compared investments as non-yielding December cost company's year. and prior and just equity the of of XX, XX.X% and to XX.X% fair value XX.X% portfolio

growing the significantly Partners reduced number BC We've and also diversification, increased company's of credit platform. exposure portfolio's originated the to credits non-accruals, the by

we achieved these and backdrop uncertain conditions. of importantly, particularly Most the market results against challenging

vintage Logan from Looking environment of opportunities will produce credit. to credit Ridge is which on in attractive we well-positioned future, now to the arising an capitalize the XXXX, believe current

power company's Over total will the structure and the the balance we maximizing coming quarters, shareholder returns. further to earnings on focus increase sheet efficient capital more of

the we company work paying to XXXX our and XXXX, BDC. and stable continue enter dividend higher pivotal optimistic higher a After a well-positioned transforming earnings into more

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

everyone. hello Thanks Ted and

fair as companies portfolio our value compares $XXX.X a and companies the to December XX XXXX. of of of value XXst, in portfolio of $XXX.X prior approximately quarter XX approximately fair million with XXst, XX value approximately As portfolio companies. million fair million with $XXX.X of XXXX of consisted portfolio in was a December This the

value fair in of XX% diversification, substantially December our portfolio to Partners the increasing as of XXXX, at by XXst, the assets invested addition company's was platform. credit originated BC portfolio In investment

million, represents price we $XXX.X loans XXst, value fair of value at of debt XXXX, have blended As first comprised aggregate par of a an value. and XX.X% lien XX% securities which of December of par

recovery, incremental December values fair of potential XXst, reflect XXXX or a Assuming value per million $XX.X NAV a our par share. $X.XX of

$X.XX a For over an luster of is and XX% if would rate default assume purposes, a you this NAV there still recovery portfolio debt matures the as time be and on rate XX% portfolio, share repaid. incremental per

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

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

to total the and of XX.X% a prior X.X% represented of annualized approximately yield approximately investment excluding a year. obligations. of investment obligations which debt year-end, represented At had income from loan total value the value, fair at quarter and nonaccruals fair portfolio, collateralized our loan portfolio collateralized XX% portfolio a debt and compares average non-accruals yield from of weighted the end at as portfolio with average XX% of income This excluding weighted

portfolio compares XXst, of our year-end, first basis and of the as on respectively prior value XX.X% to XX.X% represented debt end Further, year fair to first cost a and fair lien representing XXXX. total debt value on of cost December total and a basis as and XX.X% portfolio XX.X% the lien of our respectively. This

has in is portfolio value improvement, December Our and on of non-yielding of basis fair portfolio the which on XX.X% investment decreased as as quarter cost fourth XXXX, This XXst, value and net income. XX.X% XXXX respectively. the XX.X% equity basis, a to and XX.X% XX evident our compares of and to December which of a substantial cost a portfolio fair marks

investment for Logan Accordingly, value, X.X% of at successfully investment been year-end, nonaccrual, cost of X.X% aggregate portfolio as gain has the our $X.X debt one company's and or on During fair remains of value a fair and only realized $XX.X $XXX,XXX, fourth an approximately respectively Mount amortized and investment with investment the exited cost million million, which debt we and of in respectively. XXXX, adviser. nonaccrual of over BigMouth on since quarter the Inc. took

I'll now the over Jason. turn call to

Thanks, Patrick.

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

income the per consecutive the of net investment for which when share a this investment of of reported the and the prior mentioned, company Moreover, of is $X.XX for fourth to XXXX, $X.X during a substantial quarter second reported turnaround net investment $X.XX the income. loss quarter, net As the company or million. compared to $XXX,XXX reported improvement compared XXXX, net company the marking investment or quarter complete fourth $XXX,XXX income per quarter share of of a which Ted

as primarily increases interest operating the year-over-year, Total a in financing income this are net a of, to $XX.X million benefit and as expenses result million due for a operating result XX.X% decrease XXXX and of and base million of to looking For income declined and compared interest the $XX.X capital. portfolio deployment expenses, a to expenses total we of rates. in year, $XX.X of total investment and represents smaller lower respectively in reported $XX.X further primarily, XXXX, cost million to as to and lower results shareholders. -- This continue of we for these a reduce

unrealized the share per our $XXX.X million XXXX December or value investment the first or losses $XX.XX share year, end XX third on and Our and at half as was of per XXXX was reported $XX.XX of net of $XX.XX million as million of of compared $XX.X the or quarter the as December decrease during realized $XX XX to net per and losses primarily XXXX. to the This portfolio. share due asset

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

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

Thank you, Jason.

the are will our to any continued looking remarks, support. We Thank This concludes turn forward questions. achieved prepared operator over now call and milestones, proud all the XXXX. the for for you are significant we during we and of XXXX your to

Please comes question Instructions] from ahead. [Operator you go Thalmann. Thank Our from Ladenburg Nolan Christopher first

open. line is Your

Hi, guys. there nonrecurring Were please? items in the quarter any

is Yes, projection. quarter Yes. Chris, a this morning. quarter I for pretty is good good run Hi, a say, would rate Jason. this

incremental service for -- good flat of just represent any on in should of the Our and expenses quarter-over-quarter administrative are a some relatively relatively the portfolio, as all flat a run slightly rate fees all you. up, but oversight result pretty

related which basically basically XX% going the will tax on way things, work like dividend percentage It retard by of I be could forward? of looks proxy sort cash a mean, very quarter. later. or the any dividend, income start the given a income mean, reasonable to dividend be being then Are And than Great. -- reinstated the of there nice I will GAAP rather GAAP sooner

Yes. good That's question, a Chris.

have And dividend. that quarter is Ridge that's pay something need go all Relatively on we to that given we new portfolios the that factoring we'll manage oversight we that achieve the but tax here. this I the as throughout continue in attention dividend first to the this can stable to think is paying challenge BDCs we're this for implications. a a Logan monitor of, even year that that in think, the we we we

Great. Nice quarter.

for you. Thank it That's Okay. me.

Chris. Thanks,

comes next Slater from go from Martin Steven question [Operator Please Instructions] Our Capital. ahead.

open. Your line is

How thank on events dividend. you the portfolio And subsequent you? about the Question care share? guys. that are -- portfolio subsequent to on Anything Hi, for information. you you some gave

nothing the Hey, of would rise event that this No item. to is level Steve, Patrick. subsequent a

Or repayments subsequent? any on and deployments comment

head. that's place are slightly, the we general, In in just last think, aggregate kind credit net continue generally, utilize to deploy would my we course, I of say, capital. ordinary to I say, the middle probably put of we in deployment facility would new year off of top I

a think say, over of -- out a course we and quarter particularly decently don't leverage are Again, are Our anything we opportunity But the deployer far. see levels capital of reasonable so been net of the set. we in I general, ordinary. the pretty attractive have I'd

Okay. to -- flowed On Would say, had you NII everything you guess be would would that would portfolio Portman, on earnings? portfolio the be RFC what where hazard a that the what what have the care been slide the through? versus as to if you gave

a Yes. be a little exactly. to I'd hesitant hazard bit guess

say, of be bit now, floor is higher to but to has a Portman. a Logan than relevant fair little their fixed and rate be little percentage up would quarter-over-quarter. it tended not specifically bit it's think I higher

newer higher more a in have kind in So of But similar that should with that end assets would that, general, caveat the get bit the little earlier on there was quickly. it less say the curve I of uplift trajectory originated a cycle.

So, theoretically, more being of up curve of to benefit quickly. benefit deployer, should a Logan move from being should able kind terms that net in

comment on on on yourself? Okay. you Ted, guys the newer to maybe older you that of that some put ones to have the a investments would opposed little more inherited care as covenants, you amendments credit of the

the is because our which outperformance impacting factors of on credits, I'll higher or And by are that that, that some portfolios the and mean, to of seeing supply to growth obviously things be growth of companies other were things margin of rates. them, abating. more And were seem degradation. have strong inherited is like I obviously, the COVID that good seeing -- make be our impacted happen companies, by these down and obviously slowing the some people general side impacts rises lockdowns portfolios are then some the some all a in comment chain, we flip therefore weaker margin and leverage in

and can't the very, So not it's why I would And A technical, it's has is. of that like like, activity waivers of I weeks. increased it's you, normal. couple very, environment like a was of covenant very last like that. say, towards backwards kind lot things -- amendment tell

So little I amendments. increase would an portfolio we call across of what the on seeing technical speaking a generally are bit

Yes. of more would on I'd was to had rise that Logan QX, stuff three just alluding meat that. sort to. that bit the little Steve, say put kind ordinary type a course of above amendments In Ted

is on kind -- the that's business. of extensions towards of was some maturity moving related time. portfolio And of been a of were the which view Sequoia extension for to a All in Health them kind positions, a with third the were maturity two with the the legacy sale to name on company,

technical I'd some candidly. the extensions say and LIBOR possible an it's move being the by or on aggregator controlling with entity. et et to rise business, been cetera. I some or of kind the to the combination other had SOFR of to up think we that level sort than made acquired of was where be as kind towards month majority of to opposed try entity a But little to documents again, companies are entity company be again the challenging of it an of that more forward kind three changing wanted things that that, to of sale But I cetera, decided CEO think, we've a to of end kind Ted those the referencing only of of audit merger sort kind bit looking and historically,

are from On ahead even? extensions, generally out we these or a behind we financial standpoint, coming

say Yes, situations to fixed are One X% general, like in X%. ahead, I'd all from dependent. example, obviously, floating move we plus

But case -- a in well ahead they that case Logan, in the maturity So ahead. a number of that's a are had -- amendments the little general, out I we portfolio. in with would sorry we taken pretty bit Portman, wasn't or with and kind the of it particular subsequently come case this had say couple of of

kind I But get you very situation say of out if but obviously need was are or it taken some ahead, out kind general, a again kind in you dependent. So will, of two or yes, of month it paydown. to of kind getting technical would substantial is another

Okay. I’ll talk to later. guys. lot you Thanks a

Steve. Thanks,

further We would in over Ted for questions to turn call have like no I closing queue. back to Goldthorpe the remarks.

thank Thank forward to announce Well, quarter to results. much. our XXXX so everyone speaking us you, when today, look we again May, first for you in we Great. and you, of joining

today's conference you Thank call. for participation. your concludes This

You now may disconnect.