Logan Ridge Finance Corporation Announces Second Quarter 2023 Financial Results
Reports a Strong Second Quarter with Net Investment Income of
Announces a Distribution of
NEW YORK, Aug. 09, 2023 (GLOBE NEWSWIRE) -- Logan Ridge Finance Corporation (“Logan Ridge”, “LRFC”, “Company”, “we”, “us” or “our”) (Nasdaq: LRFC) announced today its financial results for the second quarter ended June 30, 2023.
Second Quarter 2023 Highlights
- Reported Net Investment Income (“NII”) of
$1.0 million , or$0.38 per share, which marks the Company’s fourth consecutive quarter of positive NII. - Net Asset Value (“NAV”) increased by
$1.05 per share, or3.0% , to$35.68 per share as of June 30, 2023 from$34.63 per share as of March 31, 2023. - As of June 30, 2023, our portfolio consisted of investments in 62 portfolio companies with a fair value of approximately
$206.6 million . During the quarter, the Company made approximately$4.8 million of investments and had approximately$4.4 million in repayments and sales of investments, resulting in net deployment of approximately$0.4 million . - There were no new portfolio companies added to non-accrual status during the three months ended June 30, 2023.
- During the six months ended June 30, 2023, the Company repurchased 14,112 of its outstanding shares, at an aggregate cost of approximately
$0.3 million , under the$5.0 million share repurchase program authorized by the Board of Directors on March 6, 2023, which resulted in an increase to NAV per share of$0.08 .
Subsequent Events
- On August 8, 2023, the Company’s Board of Directors approved a third quarter distribution of
$0.26 per share payable on August 31, 2023 to stockholders of record as of August 22, 2023. - Total distributions declared in 2023 (including the third quarter distribution) were
$0.66 per share.
Management Commentary
Ted Goldthorpe, Chief Executive Officer and President of LRFC, said, “I am pleased to report another strong quarter for Logan Ridge. As the Company’s exposure to the legacy equity portfolio has continued to decline and its exposure to credits originated by the BC Partners’ Credit platform has increased, the benefit to shareholders has been clear and the Company’s financials are now telling the story for us. Notably, we reported our fourth straight quarter of positive NII, but more importantly the Company reported a
Looking ahead to the back half of the year, we continue to see attractive opportunities throughout the market. Our pipeline remains strong, and the platform remains well equipped to take advantage of current market conditions.”
Selected Financial Information
- Total investment income for the second quarter of 2023 increased by
$2.0 million , to$5.3 million , compared to$3.3 million in the second quarter of 2022. - Total operating expenses for the second quarter of 2023 increased by
$0.1 million , to$4.3 million , compared to$4.2 million for the second quarter of 2022. - Net investment income for the second quarter of 2023 was
$1.0 million , as compared to a net investment loss of$0.9 million for the second quarter of 2022. The Company reported net investment income of$1.1 million for the first quarter of 2023. - Net asset value as of June 30, 2023 was
$96.2 million , or$35.68 per share, as compared to$93.8 million , or$34.63 per share, as of March 31, 2023. - Cash and cash equivalents as of June 30, 2023 were
$6.3 million , as compared to$9.3 million as of March 31, 2023. - The investment portfolio as of June 30, 2023 consisted of investments in 62 portfolio companies with a fair value of approximately
$206.6 million . This compares to 59 portfolio companies with a fair value of approximately$203.3 million as of March 31, 2023. - Deployment remained strong. During the second quarter of 2023, we made approximately
$4.8 million of investments and had approximately$4.4 million in repayments and sales of investments, resulting in net deployment of approximately$0.4 million for the period. - The debt investment portfolio as of June 30, 2023 represented
82.2% of the fair value of our total portfolio, with a weighted average annualized yield of approximately10.8% (excluding income from non-accruals and collateralized loan obligations), compared to a debt investment portfolio of approximately83.1% with a weighted average annualized yield of approximately10.7% (excluding income from non-accruals and collateralized loan obligations) as of March 31, 2023. As of June 30, 2023,16.8% of the fair value of our debt investment portfolio was bearing a fixed rate of interest, compared to16.6% of the fair value of our debt investment portfolio as of March 31, 2023. - Non-Accruals: As of June 30, 2023, we had debt investments in two portfolio companies on non-accrual status with an amortized cost and fair value of
$17.1 million and$11.1 million , respectively, representing7.8% and5.3% of the investment portfolio’s amortized cost and fair value, respectively. As of March 31, 2023, we had debt investments in two portfolio companies on non-accrual status with an aggregate amortized cost and fair value of$14.2 million and$10.0 million , respectively, representing6.4% and4.9% of the investment portfolio’s amortized cost and fair value, respectively. - Our asset coverage ratio as of June 30, 2023 was
178% .
Results of Operations
Operating results for the three and six months ended June 30, 2023 and June 30, 2022 were as follows (dollars in thousands):
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
Total investment income | $ | 5,344 | $ | 3,303 | $ | 10,600 | $ | 6,641 | |||||||
Total expenses | 4,305 | 4,232 | 8,488 | 8,620 | |||||||||||
Net investment income (loss) | 1,039 | (929 | ) | 2,112 | (1,979 | ) | |||||||||
Net realized (loss) gain on investments | (2,362 | ) | 15,503 | (3,868 | ) | 15,466 | |||||||||
Net change in unrealized appreciation (depreciation) on investments | 4,563 | (19,608 | ) | 4,346 | (19,379 | ) | |||||||||
Net increase (decrease) in net assets resulting from operations | $ | 3,240 | $ | (5,034 | ) | $ | 2,590 | $ | (5,892 | ) | |||||
Investment income
The composition of our investment income for the three and six months ended June 30, 2023, and June 30, 2022 was as follows (dollars in thousands):
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||
Interest income | $ | 4,907 | $ | 2,996 | $ | 9,675 | $ | 6,193 | |||
Payment-in-kind interest | 319 | 307 | 783 | 440 | |||||||
Dividend income | 19 | — | 33 | — | |||||||
Other income | 99 | — | 109 | 8 | |||||||
Total investment income | $ | 5,344 | $ | 3,303 | $ | 10,600 | $ | 6,641 | |||
Fair Value of Investments
The composition of our investments as of June 30, 2023 and December 31, 2022 at amortized cost and the fair value of investments was as follows (dollars in thousands):
As of June 30, 2023 | Investments at Amortized Cost | Amortized Cost Percentage of Total Portfolio | Investments at Fair Value | Fair Value Percentage of Total Portfolio | |||||||
First Lien Debt | $ | 144,849 | 66.1 | % | $ | 138,045 | 66.8 | % | |||
Second Lien Debt | 8,614 | 4.0 | % | 7,102 | 3.4 | % | |||||
Subordinated Debt | 26,573 | 12.1 | % | 24,709 | 12.0 | % | |||||
Collateralized Loan Obligations | 2,440 | 1.1 | % | 2,440 | 1.2 | % | |||||
Joint Venture | 475 | 0.2 | % | 460 | 0.2 | % | |||||
Equity | 36,216 | 16.5 | % | 33,833 | 16.4 | % | |||||
Total | $ | 219,167 | 100.0 | % | $ | 206,589 | 100.0 | % | |||
As of December 31, 2022 | Investments at Amortized Cost | Amortized Cost Percentage of Total Portfolio | Investments at Fair Value | Fair Value Percentage of Total 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 June 30, 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 in interest expense | Increase (decrease) in net income | ||||||||
Up 300 basis points | $ | 4,410 | $ | (1,717 | ) | $ | 2,693 | ||||
Up 200 basis points | 2,940 | (1,144 | ) | 1,796 | |||||||
Up 100 basis points | 1,470 | (572 | ) | 898 | |||||||
Down 100 basis points | (1,470 | ) | 572 | (898 | ) | ||||||
Down 200 basis points | (2,940 | ) | 1,144 | (1,796 | ) | ||||||
Down 300 basis points | $ | (4,332 | ) | $ | 1,717 | $ | (2,615 | ) | |||
Conference Call and Webcast
We will hold a conference call on Thursday, August 10, 2023, at 10:00 a.m. Eastern Time to discuss second 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 2979808. A replay of the conference call will be available from approximately 12:00 p.m. Eastern Time on August 10th through August 17th.
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/fpdu6q7v. The online archive of the webcast will be available on the Company’s website shortly after the call.
About Logan Ridge Finance Corporation
Logan 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 Credit
BC Partners is a leading international investment firm with over
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 Corporation
650 Madison Avenue, 23rd Floor
New 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 Ferraro
The 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 June 30, 2023 | As of December 31, 2022 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Investments at fair value: | |||||||
Non-control/non-affiliate investments (amortized cost of | $ | 177,424 | $ | 177,268 | |||
Affiliate investments (amortized cost of | 29,165 | 26,324 | |||||
Total investments at fair value (amortized cost of | 206,589 | 203,592 | |||||
Cash and cash equivalents | 6,287 | 6,793 | |||||
Interest and dividend receivable | 2,013 | 1,578 | |||||
Prepaid expenses | 2,285 | 2,682 | |||||
Other assets | 6 | 65 | |||||
Total assets | $ | 217,180 | $ | 214,710 | |||
LIABILITIES | |||||||
2026 Notes (net of deferred financing costs and original issue discount of | 48,763 | 48,579 | |||||
2032 Convertible Notes (net of deferred financing costs and original issue discount of | 13,942 | 13,883 | |||||
KeyBank Credit Facility (net of deferred financing costs of | 55,282 | 54,615 | |||||
Management and incentive fees payable | 946 | 933 | |||||
Interest and financing fees payable | 1,031 | 973 | |||||
Accounts payable and accrued expenses | 990 | 722 | |||||
Total liabilities | $ | 120,954 | $ | 119,705 | |||
Commitments and contingencies | |||||||
NET ASSETS | |||||||
Common stock, par value | $ | 27 | $ | 27 | |||
Additional paid in capital | 190,752 | 191,038 | |||||
Total distributable loss | (94,553 | ) | (96,060 | ) | |||
Total net assets | $ | 96,226 | $ | 95,005 | |||
Total liabilities and net assets | $ | 217,180 | $ | 214,710 | |||
Net asset value per share | $ | 35.68 | $ | 35.04 | |||
Logan Ridge Finance Corporation
Consolidated Statements of Operations
(in thousands, except share and per share data)
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
INVESTMENT INCOME | |||||||||||||||
Interest income: | |||||||||||||||
Non-control/non-affiliate investments | $ | 4,773 | $ | 2,713 | $ | 9,377 | $ | 5,655 | |||||||
Affiliate investments | 134 | 185 | 298 | 345 | |||||||||||
Control investments | — | 98 | — | 193 | |||||||||||
Total interest income | 4,907 | 2,996 | 9,675 | 6,193 | |||||||||||
Payment-in-kind interest and dividend income: | |||||||||||||||
Non-control/non-affiliate investments | 271 | 261 | 687 | (1) | 347 | ||||||||||
Affiliate investments | 48 | 46 | 96 | 93 | |||||||||||
Total payment-in-kind interest and dividend income | 319 | 307 | 783 | 440 | |||||||||||
Dividend income: | |||||||||||||||
Affiliate investments | 19 | — | 33 | — | |||||||||||
Total dividend income | 19 | — | 33 | — | |||||||||||
Other income: | |||||||||||||||
Non-control/non-affiliate investments | 99 | — | 109 | 8 | |||||||||||
Total other income | 99 | — | 109 | 8 | |||||||||||
Total investment income | 5,344 | 3,303 | 10,600 | 6,641 | |||||||||||
EXPENSES | |||||||||||||||
Interest and financing expenses | 2,236 | 2,131 | 4,305 | 4,319 | |||||||||||
Base management fee | 946 | 973 | 1,876 | 2,001 | |||||||||||
Directors' expense | 135 | 120 | 270 | 223 | |||||||||||
Administrative service fees | 224 | 131 | 481 | 251 | |||||||||||
General and administrative expenses | 764 | 877 | 1,556 | 1,826 | |||||||||||
Total expenses | 4,305 | 4,232 | 8,488 | 8,620 | |||||||||||
NET INVESTMENT INCOME (LOSS) | 1,039 | (929 | ) | 2,112 | (1,979 | ) | |||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | |||||||||||||||
Net realized (loss) gain on investments: | |||||||||||||||
Non-control/non-affiliate investments | (2,362 | ) | 15,503 | (3,868 | ) | 15,466 | |||||||||
Net realized (loss) gain on investments | (2,362 | ) | 15,503 | (3,868 | ) | 15,466 | |||||||||
Net change in unrealized appreciation (depreciation) on investments: | |||||||||||||||
Non-control/non-affiliate investments | 510 | (16,495 | ) | (740 | ) | (17,645 | ) | ||||||||
Affiliate investments | 4,053 | 174 | 5,086 | 1,477 | |||||||||||
Control investments | — | (3,287 | ) | — | (3,211 | ) | |||||||||
Net change in unrealized appreciation (depreciation) on investments | 4,563 | (19,608 | ) | 4,346 | (19,379 | ) | |||||||||
Total net realized and change in unrealized gain (loss) on investments | 2,201 | (4,105 | ) | 478 | (3,913 | ) | |||||||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 3,240 | $ | (5,034 | ) | $ | 2,590 | $ | (5,892 | ) | |||||
NET INCREASE (DECREASE) IN NET ASSETS PER SHARE RESULTING FROM OPERATIONS – BASIC | $ | 1.20 | $ | (1.86 | ) | $ | 0.96 | $ | (2.17 | ) | |||||
WEIGHTED AVERAGE COMMON STOCK OUTSTANDING – BASIC | 2,703,871 | 2,711,068 | 2,707,399 | 2,711,068 | |||||||||||
NET INCREASE (DECREASE) IN NET ASSETS PER SHARE RESULTING FROM OPERATIONS – DILUTED | $ | 1.07 | $ | (1.86 | ) | $ | 0.94 | $ | (2.17 | ) | |||||
WEIGHTED AVERAGE COMMON STOCK OUTSTANDING – DILUTED | 3,243,374 | 2,711,068 | 3,246,902 | 2,711,068 | |||||||||||
DISTRIBUTIONS PAID PER SHARE | $ | 0.22 | $ | — | $ | 0.40 | $ | — | |||||||
____________________
(1) During the six months ended June 30, 2023, the Company received