Logan Ridge Finance Corporation (“Logan Ridge”, “LRFC”, “Company”,
“we”, “us” or “our”) (Nasdaq: LRFC) announced today its financial
results for the first quarter ended March 31, 2023.
First Quarter 2023 Highlights
- Reported Net Investment Income
(“NII”) of $1.1 million or $0.40 per share, inclusive of $0.06 of
non-recurring net investment income, which marks the Company’s
third consecutive quarter of positive NII and a 69% increase over
the prior quarter.
- Net asset value decreased to $34.63
per share as of March 31, 2023 from $35.04 per share in the prior
quarter.
- As of March 31, 2023, our portfolio
consisted of investments in 59 portfolio companies with a fair
value of approximately $203.3 million. During the quarter, the
Company made approximately $7.4 million of investments and had
approximately $6.7 million in repayments and sales of investments,
resulting in net deployment of approximately $0.7 million.
- During the three months ended March
31, 2023, the Company repurchased 1,625 shares at an aggregate cost
of approximately $34,000, under its $5.0 million share repurchase
program authorized by the Board of Directors on March 6, 2023,
which resulted in an increase to the net asset value per share of
$0.01.
Subsequent Events
- On May 9, 2023, the Company’s Board
of Directors approved a distribution of $0.22 per share payable on
May 31, 2023 to stockholders of record as of May 22, 2023.
Management CommentaryTed
Goldthorpe, Chief Executive Officer and President of LRFC, said,
“During the first quarter of 2023, we continued down the strong
growth path we created in 2022. The steps we took in 2022 to
reposition the Company’s investment portfolio by exiting non-income
producing legacy equity assets, significantly increasing the
portfolio’s diversification, and growing the Company’s exposure to
credits originated by the BC Partners Credit platform continued to
pay off as we recorded a third straight quarter of positive NII,
which grew by over 70% compared to the prior quarter. This improved
operating performance, coupled with a substantially lower cost of
debt capital compared to the same period in the prior year, allowed
our Board of Directors to approve an increase in the quarterly
dividend from $0.18 per share declared in the previous quarter to
$0.22 per share. Additionally, we have begun repurchasing shares
through the share repurchase program that was authorized by the
Board of Directors on March 6, 2023. As we look forward into the
rest of 2023, we will continue to focus on maximizing the earnings
power of the Company’s stronger balance sheet and more efficient
capital structure to further increase stockholder total
returns.”
Selected Financial Information
- Total investment
income for the first quarter of 2023 increased by $2.0
million, to $5.3 million, compared to the first quarter of
2022.
- Total operating
expenses for the first quarter of 2023 declined by $0.2
million, to $4.2 million, compared to $4.4 million for the first
quarter of 2022.
- Net investment
income for the first quarter of 2023 was $1.1 million
(inclusive of $0.2 million of non-recurring income) as compared to
a net investment loss of $1.1 million for the first quarter ended
2022.
- Net asset value as
of March 31, 2023 was $93.8 million, or $34.63 per share, as
compared to $95.0 million, or $35.04 per share, as of December 31,
2022.
- Cash and
cash equivalents as of March 31, 2023 were $9.3 million as
compared to $6.8 million as of December 31, 2022.
- The investment
portfolio as of March 31, 2023 consisted of investments in
59 portfolio companies with a fair value of approximately $203.3
million. This compares to 59 portfolio companies with a fair value
of approximately $203.6 million as of December 31, 2022.
- Deployment
remained strong. During the first quarter of 2023, we made
approximately $7.4 million of investments and had approximately
$6.7 million in repayments and sales of investments, resulting in
net deployment of approximately $0.7 million for the period.
- The debt investment
portfolio as of March 31, 2023 represented 83.1% of
the fair value of our total portfolio, with a weighted average
annualized yield of approximately 10.7% (excluding the income from
non-accruals and collateralized loan obligations), compared to a
debt investment portfolio of approximately 83.2% with a weighted
average annualized yield of approximately 10.4% (excluding the
income from non-accruals and collateralized loan obligations) at
December 31, 2022. As of March 31, 2023, 16.6% of the fair
value of our debt investment portfolio was bearing a fixed rate of
interest, compared to 17.2% of the fair value of our debt
investment portfolio as of December 31, 2022.
- Non-Accruals: As
of March 31, 2023, we had debt investments in two portfolio
companies on non-accrual status with an amortized cost and fair
value of $14.2 million and $10.0 million, respectively,
representing 6.4% and 4.9% of the investment portfolio’s amortized
cost and fair value, respectively. As of December 31, 2022, we
had debt investments in one portfolio company on non-accrual status
with an aggregate amortized cost and fair value of $11.9 million
and $9.7 million, respectively, representing 5.4% and 4.8% of the
investment portfolio’s amortized cost and fair value,
respectively.
- Our asset coverage
ratio as of March 31, 2023 was 175%.
Results of OperationsOperating
results for the quarters ended March 31, 2023 and March 31,
2022 were as follows (dollars in thousands):
|
|
For the Three Months Ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
Total investment income |
|
$ |
5,256 |
|
|
$ |
3,337 |
|
Total expenses |
|
|
4,183 |
|
|
|
4,388 |
|
Net investment income (loss) |
|
|
1,073 |
|
|
|
(1,051 |
) |
Net realized loss on
investments |
|
|
(1,506 |
) |
|
|
(36 |
) |
Net change in unrealized
(depreciation) appreciation on investments |
|
|
(217 |
) |
|
|
229 |
|
Net decrease in net assets
resulting from operations |
|
$ |
(650 |
) |
|
$ |
(858 |
) |
Investment income
The composition of our investment income for the
three months ended March 31, 2023, and March 31, 2022 was as
follows (dollars in thousands):
|
|
For the Three Months Ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
Interest income |
|
$ |
4,768 |
|
|
$ |
3,197 |
|
Payment-in-kind interest |
|
|
464 |
|
|
|
132 |
|
Dividend income |
|
|
14 |
|
|
|
— |
|
Other income |
|
|
10 |
|
|
|
8 |
|
Total investment income |
|
$ |
5,256 |
|
|
$ |
3,337 |
|
Fair Value of InvestmentsThe composition of our
investments as of March 31, 2023 and December 31, 2022 at amortized
cost and the fair value of investments was as follows (dollars in
thousands):
As of March 31,
2023 |
|
Investments atAmortized Cost |
|
|
Amortized CostPercentage
ofTotal Portfolio |
|
|
Investments atFair Value |
|
|
Fair ValuePercentage
ofTotal Portfolio |
|
First Lien Debt |
|
$ |
144,304 |
|
|
|
65.4 |
% |
|
$ |
137,563 |
|
|
|
67.7 |
% |
Second Lien Debt |
|
|
8,444 |
|
|
|
3.8 |
% |
|
|
6,775 |
|
|
|
3.3 |
% |
Subordinated Debt |
|
|
26,573 |
|
|
|
12.1 |
% |
|
|
24,696 |
|
|
|
12.1 |
% |
Collateralized Loan
Obligations |
|
|
4,622 |
|
|
|
2.1 |
% |
|
|
4,207 |
|
|
|
2.1 |
% |
Joint Venture |
|
|
470 |
|
|
|
0.2 |
% |
|
|
456 |
|
|
|
0.2 |
% |
Equity |
|
|
36,065 |
|
|
|
16.4 |
% |
|
|
29,640 |
|
|
|
14.6 |
% |
Total |
|
$ |
220,478 |
|
|
|
100.0 |
% |
|
$ |
203,337 |
|
|
|
100.0 |
% |
As of December 31,
2022 |
|
Investments atAmortized Cost |
|
|
Amortized CostPercentage
ofTotal Portfolio |
|
|
Investments atFair Value |
|
|
Fair ValuePercentage
ofTotal Portfolio |
|
First Lien Debt |
|
$ |
143,047 |
|
|
|
64.9 |
% |
|
$ |
136,896 |
|
|
|
67.3 |
% |
Second Lien Debt |
|
|
8,283 |
|
|
|
3.8 |
% |
|
|
6,464 |
|
|
|
3.2 |
% |
Subordinated Debt |
|
|
26,571 |
|
|
|
12.0 |
% |
|
|
25,851 |
|
|
|
12.7 |
% |
Collateralized Loan
Obligations |
|
|
6,185 |
|
|
|
2.8 |
% |
|
|
4,972 |
|
|
|
2.4 |
% |
Joint Venture |
|
|
414 |
|
|
|
0.2 |
% |
|
|
403 |
|
|
|
0.2 |
% |
Equity |
|
|
36,016 |
|
|
|
16.3 |
% |
|
|
29,006 |
|
|
|
14.2 |
% |
Total |
|
$ |
220,516 |
|
|
|
100.0 |
% |
|
$ |
203,592 |
|
|
|
100.0 |
% |
Interest Rate Risk
Based on our March 31, 2023 consolidated
statements of assets and liabilities, the following table shows the
annual impact on net income (excluding the potential related
incentive fee impact) of base rate changes in interest rates
(considering interest rate floors for variable rate securities)
assuming no changes in our investment and borrowing structure
(dollars in thousands):
Basis Point Change |
Increase(decrease) in interest
income |
|
(Increase)decrease
ininterest expense |
|
Increase(decrease) innet
income |
|
Up 300 basis points |
$ |
4,493 |
|
$ |
(1,776 |
) |
$ |
2,717 |
|
Up 200 basis points |
|
2,995 |
|
|
(1,184 |
) |
|
1,811 |
|
Up 100 basis points |
|
1,498 |
|
|
(592 |
) |
|
906 |
|
Down 100 basis points |
|
(1,498 |
) |
|
592 |
|
|
(906 |
) |
Down 200 basis points |
|
(2,977 |
) |
|
1,184 |
|
|
(1,793 |
) |
Down 300 basis points |
$ |
(4,372 |
) |
$ |
1,776 |
|
$ |
(2,596 |
) |
Conference Call and Webcast
We will hold a conference call on Thursday, May
11, 2023, at 10:00 a.m. Eastern Time to discuss first quarter 2023
financial results. Stockholders, prospective stockholders, and
analysts are welcome to listen to the call or attend the
webcast.
To access the conference call, please dial (646)
307-1963 approximately 10 minutes prior to the start of the call
and use the conference ID 5295745. A replay of the conference call
will be available from approximately 12:00 p.m. Eastern Time on May
11 through May 18.
A live audio webcast of the conference call can
be accessed via the Internet, on a listen-only basis on our
Company’s website www.loganridgefinance.com in the Investor
Resources section under Events and Presentations. The webcast can
also be accessed by clicking the following link:
https://edge.media-server.com/mmc/p/26khk7wn. The online
archive of the webcast will be available on the Company’s website
shortly after the call.
About Logan Ridge Finance
CorporationLogan Ridge Finance Corporation (Nasdaq: LRFC)
is a business development company that invests primarily in first
lien loans and, to a lesser extent, second lien loans and equity
securities issued by lower middle-market companies. The Company
invests in performing, well-established middle-market businesses
that operate across a wide range of industries. It employs
fundamental credit analysis, targeting investments in businesses
with relatively low levels of cyclicality and operating risk. For
more information, visit www.loganridgefinance.com.
About Mount Logan Capital Inc.
Mount Logan Capital Inc. is an alternative asset management company
that is focused on public and private debt securities in the North
American market. The Company seeks to source and actively manage
loans and other debt-like securities with credit-oriented
characteristics. The Company actively sources, evaluates,
underwrites, manages, monitors, and primarily invests in loans,
debt securities, and other credit-oriented instruments that present
attractive risk-adjusted returns and present low risk of principal
impairment through the credit cycle.
About BC Partners Advisors L.P. and BC
Partners CreditBC Partners is a leading international
investment firm with over $40 billion of assets under management in
private equity, private credit and real estate strategies.
Established in 1986, BC Partners has played an active role in
developing the European buyout market for three decades. Today, BC
Partners executives operate across markets as an integrated team
through the firm's offices in North America and Europe. Since
inception, BC Partners has completed 117 private equity investments
in companies with a total enterprise value of €149 billion and is
currently investing its eleventh private equity fund. For more
information, please visit www.bcpartners.com.
BC Partners Credit was launched in February 2017
and has pursued a strategy focused on identifying attractive credit
opportunities in any market environment and across sectors,
leveraging the deal sourcing and infrastructure made available from
BC Partners.
Cautionary Statement Regarding
Forward-Looking Statements
This communication contains “forward-looking”
statements. Forward-looking statements concern future circumstances
and results and other statements that are not historical facts and
are sometimes identified by the words “may,” “will,” “should,”
“potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,”
“estimate,” “overestimate,” “underestimate,” “believe,” “could,”
“project,” “predict,” “continue,” “target” or other similar words
or expressions. Forward-looking statements are based upon current
plans, estimates and expectations that are subject to risks,
uncertainties, and assumptions. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions
prove to be incorrect, actual results may vary materially from
those indicated or anticipated by such forward-looking statements.
The inclusion of such statements should not be regarded as a
representation that such plans, estimates or expectations will be
achieved. Important factors that could cause actual results to
differ materially from such plans, estimates or expectations
include those risk factors detailed in the Company’s reports filed
with the Securities and Exchange Commission (“SEC”), including the
Company’s annual report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K and other documents filed with
the SEC.
Any forward-looking statements speak only as of
the date of this communication. The Company does not undertake any
obligation to update any forward-looking statements, whether as a
result of new information or developments, future events or
otherwise, except as required by law. Readers are cautioned not to
place undue reliance on any of these forward-looking
statements.
For additional information, contact:
Logan Ridge Finance Corporation650 Madison Avenue, 23rd FloorNew
York, NY 10022
Jason Roos Chief Financial Officer
Jason.Roos@bcpartners.com (212) 891-5046
Lena Cati The Equity Group
Inc.lcati@equityny.com (212) 836-9611
Val FerraroThe Equity Group
Inc.vferraro@equityny.com (212) 836-9633
Logan Ridge Finance Corporation |
|
Consolidated Statements of Assets and
Liabilities |
|
(in thousands, except share and per share
data) |
|
|
|
|
|
As of March 31,2023 |
|
|
As of December 31,2022 |
|
|
|
(unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
Investments at fair
value: |
|
|
|
|
|
|
Non-control/non-affiliate investments (amortized cost of $192,249
and $191,435, respectively) |
|
$ |
176,832 |
|
|
$ |
177,268 |
|
Affiliate investments (amortized cost of $28,229 and $29,081,
respectively) |
|
|
26,505 |
|
|
|
26,324 |
|
Total investments at fair value (amortized cost of $220,478 and
$220,516, respectively) |
|
|
203,337 |
|
|
|
203,592 |
|
Cash and cash equivalents |
|
|
9,347 |
|
|
|
6,793 |
|
Interest and dividend
receivable |
|
|
1,209 |
|
|
|
1,578 |
|
Prepaid expenses |
|
|
2,514 |
|
|
|
2,682 |
|
Other assets |
|
|
62 |
|
|
|
65 |
|
Total assets |
|
$ |
216,469 |
|
|
$ |
214,710 |
|
LIABILITIES |
|
|
|
|
|
|
2026 Notes (net of deferred
financing costs and original issue discount of $1,333 and $1,421,
respectively) |
|
|
48,667 |
|
|
|
48,579 |
|
2032 Convertible Notes (net of
deferred financing costs and original issue discount of $1,088 and
$1,117, respectively) |
|
|
13,912 |
|
|
|
13,883 |
|
KeyBank Credit Facility (net
of deferred financing costs of $1,238 and $1,322,
respectively) |
|
|
57,140 |
|
|
|
54,615 |
|
Management and incentive fees
payable |
|
|
932 |
|
|
|
933 |
|
Interest and financing fees
payable |
|
|
1,469 |
|
|
|
973 |
|
Accounts payable and accrued
expenses |
|
|
516 |
|
|
|
722 |
|
Total liabilities |
|
$ |
122,636 |
|
|
$ |
119,705 |
|
Commitments and
contingencies |
|
|
|
|
|
|
NET ASSETS |
|
|
|
|
|
|
Common stock, par value $0.01,
100,000,000 common shares authorized, 2,709,583 and 2,711,068
common shares issued and outstanding, respectively |
|
$ |
27 |
|
|
$ |
27 |
|
Additional paid in
capital |
|
|
191,007 |
|
|
|
191,038 |
|
Total distributable loss |
|
|
(97,201 |
) |
|
|
(96,060 |
) |
Total net assets |
|
$ |
93,833 |
|
|
$ |
95,005 |
|
Total liabilities and net
assets |
|
$ |
216,469 |
|
|
$ |
214,710 |
|
Net asset value per share |
|
$ |
34.63 |
|
|
$ |
35.04 |
|
Logan Ridge Finance Corporation |
|
Consolidated Statements of Operations |
|
(in thousands, except share and per share
data) |
|
|
|
|
|
For the Three Months Ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
INVESTMENT INCOME |
|
|
|
|
|
|
Interest income: |
|
|
|
|
|
|
Non-control/non-affiliate investments |
|
$ |
4,604 |
|
|
$ |
2,383 |
|
Affiliate investments |
|
|
164 |
|
|
|
719 |
|
Control investments |
|
|
— |
|
|
|
95 |
|
Total interest income |
|
|
4,768 |
|
|
|
3,197 |
|
Payment-in-kind interest and
dividend income: |
|
|
|
|
|
|
Non-control/non-affiliate investments |
|
|
416 |
(1) |
|
|
85 |
|
Affiliate investments |
|
|
48 |
|
|
|
47 |
|
Total payment-in-kind interest and dividend income |
|
|
464 |
|
|
|
132 |
|
Dividend income: |
|
|
|
|
|
|
Non-control/non-affiliate investments |
|
|
— |
|
|
|
— |
|
Affiliate investments |
|
|
14 |
|
|
|
— |
|
Total dividend income |
|
|
14 |
|
|
|
— |
|
Other income: |
|
|
|
|
|
|
Non-control/non-affiliate investments |
|
|
10 |
|
|
|
— |
|
Affiliate investments |
|
|
— |
|
|
|
8 |
|
Total other income |
|
|
10 |
|
|
|
8 |
|
Total investment income |
|
|
5,256 |
|
|
|
3,337 |
|
EXPENSES |
|
|
|
|
|
|
Interest and financing
expenses |
|
|
2,069 |
|
|
|
2,188 |
|
Base management fee |
|
|
930 |
|
|
|
1,027 |
|
Directors' expense |
|
|
135 |
|
|
|
103 |
|
Administrative service
fees |
|
|
257 |
|
|
|
120 |
|
General and administrative
expenses |
|
|
792 |
|
|
|
950 |
|
Total expenses |
|
|
4,183 |
|
|
|
4,388 |
|
NET INVESTMENT INCOME (LOSS) |
|
|
1,073 |
|
|
|
(1,051 |
) |
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS |
|
|
|
|
|
|
Net realized (loss) gain on
investments: |
|
|
|
|
|
|
Non-control/non-affiliate investments |
|
|
(1,506 |
) |
|
|
(36 |
) |
Net realized (loss) gain on investments |
|
|
(1,506 |
) |
|
|
(36 |
) |
Net change in unrealized
(depreciation) appreciation on investments: |
|
|
|
|
|
|
Non-control/non-affiliate investments |
|
|
(1,250 |
) |
|
|
(1,150 |
) |
Affiliate investments |
|
|
1,033 |
|
|
|
1,303 |
|
Control investments |
|
|
— |
|
|
|
76 |
|
Net change in unrealized (depreciation) appreciation on
investments |
|
|
(217 |
) |
|
|
229 |
|
Total net realized and change in unrealized (loss) gain on
investments |
|
|
(1,723 |
) |
|
|
193 |
|
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS |
|
$ |
(650 |
) |
|
$ |
(858 |
) |
NET DECREASE IN NET ASSETS PER
SHARE RESULTINGFROM OPERATIONS – BASIC & DILUTED |
|
$ |
(0.24 |
) |
|
$ |
(0.32 |
) |
WEIGHTED AVERAGE COMMON STOCK
OUTSTANDING– BASIC & DILUTED |
|
|
2,710,990 |
|
|
|
2,711,068 |
|
DISTRIBUTIONS PAID PER
SHARE |
|
$ |
0.18 |
|
|
$ |
— |
|
(1) During the period
ended March 31, 2023, the Company received $0.2 million of
non-recurring fee income that was paid in-kind and included in this
financial statement line item.
Logan Ridge Finance (NASDAQ:LRFC)
Gráfica de Acción Histórica
De Ago 2024 a Sep 2024
Logan Ridge Finance (NASDAQ:LRFC)
Gráfica de Acción Histórica
De Sep 2023 a Sep 2024