Logan Ridge Finance Corporation Reports Second Quarter 2021 Earnings Results
Logan Ridge Finance Corporation (LRFC) reported its Q2 2021 financial results, showing a net asset value per share of $41.96, down from $44.74 in Q1 2021. The company repaid $71 million of SBA-guaranteed debentures and transitioned to a new investment adviser, Mount Logan Management, on July 1, 2021. Total investment income increased slightly to $5 million, while total expenses decreased to $5 million. Net realized gains were $6.1 million, with a significant shift from losses in Q1. However, net change in unrealized depreciation was $13.7 million, indicating ongoing valuation challenges.
- Total investment income rose to $5.0 million, compared to $4.9 million in Q1 2021.
- Expenses decreased to $5 million from $5.7 million in Q1 2021, reflecting improved cost management.
- Net realized gains totaled $6.1 million for Q2 2021, a recovery from net losses in the previous quarter.
- Net asset value per share decreased from $44.74 in Q1 to $41.96 in Q2 2021.
- Net change in unrealized depreciation was $13.7 million, indicating valuation declines.
- The net decrease in assets from operations was $7.6 million, contrasting with a net increase of $12.4 million in Q1 2021.
Company to Host Quarterly Conference Call at 11:00AM ET Today
NEW YORK, Aug. 16, 2021 (GLOBE NEWSWIRE) -- Logan Ridge Finance Corporation (“LRFC” or the “Company”) (NASDAQ: LRFC) today announced its financial results for the second quarter of 2021.
Previously Announced Adviser Transition
On April 21, 2021, the Company announced it had entered into an agreement to transition to a new investment adviser, Mount Logan Management LLC (“Mount Logan”), a wholly-owned subsidiary of Mount Logan Capital Inc. (“MLC”), both affiliates of BC Partners Advisors L.P. (“BC Partners”) for U.S. regulatory purposes. The transition was approved at a special meeting of the Company’s stockholders held on May 27, 2021 and was completed on July 1, 2021.
Second Quarter 2021 Overview
- Net asset value per share of
$41.96 at June 30, 2021, compared to$44.74 at March 31, 2021. - Repaid
$71.0 million of SBA-guaranteed debentures and relinquished the corresponding SBIC license. - Total debt-to-equity of 1.3x at June 30, 2021, compared to 1.6x at March 31, 2021 and 2.0x at December 31, 2020.
- As of June 30, 2021, the Company’s investment portfolio consisted of investments in 32 portfolio companies with an aggregate fair value of approximately
$228.0 million . The debt investment portfolio, which represented67.7% of the fair value of the total portfolio, had a yield of approximately9.9% . - During the quarter, the Company made approximately
$10.0 million of investments and had approximately$33.5 million in repayments and sales, resulting in net repayments and sales of approximately$23.5 million for the period. - Subsequent to quarter-end, the Company has repaid the KeyBank credit facility in full.
Management Commentary
Ted Goldthorpe, Chief Executive Officer and President of LRFC, said, “We are pleased to have successfully completed the investment adviser transition to Mount Logan on July 1st. We are actively working to optimize the Company’s capital structure and to rotate out of non-income generating investments over time. Longer-term, our objective is to lower operational costs and increase scale, which we believe will enhance value for stockholders.”
Selected Financial Highlights
Total investment income was
Total expenses for the second quarter of 2021 were
Net realized gains totaled
Net change in unrealized depreciation totaled
The net decrease in assets resulting from operations was
As of June 30, 2021, total borrowings outstanding were
As of June 30, 2021, the Company had debt investments in three portfolio companies on non-accrual status with an aggregate amortized cost of
Conference Call and Webcast
LRFC will discuss these results in a conference call this morning (Monday, August 16, 2021) at 11:00 a.m. ET.
To access the conference call, please dial (844) 616-4517 approximately 10 minutes prior to the start of the conference call. A replay of the conference call will be available from August 16, 2021 until August 23, 2021. The dial in number for the replay is (855) 859-2056 and the conference ID is 2190603.
A live audio webcast of the conference call can be accessed via the Internet, on a listen-only basis on the Company’s website, loganridgefinance.com, in the Investor Relations section, under Events and Presentations. The webcast can also be accessed by clicking the following link: Logan Ridge Second Quarter 2021 Conference Call. 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 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, periodic 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
Jeehae Linford
The Equity Group Inc.
jlinford@equityny.com
(212) 836-9615
Logan Ridge Finance Corporation
Consolidated Statements of Assets and Liabilities
(in thousands, except share and per share data)
| As of | ||||||||
| June 30, 2021 | December 31, 2020 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Investments at fair value: | ||||||||
| Non-control/non-affiliate investments (amortized cost of | $ | 139,097 | $ | 172,848 | ||||
| Affiliate investments (amortized cost of | 81,659 | 93,425 | ||||||
| Control investments (amortized cost of | 7,292 | 8,419 | ||||||
| Total investments at fair value (amortized cost of | 228,048 | 274,692 | ||||||
| Cash and cash equivalents | 26,144 | 49,942 | ||||||
| Interest and dividend receivable | 1,101 | 2,286 | ||||||
| Prepaid expenses | 629 | 1,077 | ||||||
| Receivable for unsettled trades | 7,234 | - | ||||||
| Total assets | $ | 263,156 | $ | 327,997 | ||||
| LIABILITIES | ||||||||
| SBA-guaranteed debentures (net of deferred financing costs of | $ | - | $ | 90,515 | ||||
| 2022 Notes (net of deferred financing costs of | 72,277 | 71,987 | ||||||
| 2022 Convertible Notes (net of deferred financing costs of | 51,726 | 51,536 | ||||||
| KeyBank Credit Facility (net of deferred financing costs of | 24,550 | (546 | ) | |||||
| Management and incentive fees payable | 70 | 3,842 | ||||||
| Interest and financing fees payable | 778 | 1,688 | ||||||
| Accounts payable and accrued expenses | 8 | 28 | ||||||
| Total liabilities | $ | 149,409 | $ | 219,050 | ||||
| Commitments and contingencies (Note 2) | ||||||||
| NET ASSETS | ||||||||
| Common stock, par value | $ | 27 | $ | 27 | ||||
| Additional paid in capital | 229,481 | 229,481 | ||||||
| Total distributable loss | (115,761 | ) | (120,561 | ) | ||||
| Total net assets | $ | 113,747 | $ | 108,947 | ||||
| Total liabilities and net assets | $ | 263,156 | $ | 327,997 | ||||
| Net asset value per share | $ | 41.96 | $ | 40.19 | ||||
Logan Ridge Finance Corporation
Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| INVESTMENT INCOME | ||||||||||||||||
| Interest and fee income: | ||||||||||||||||
| Non-control/non-affiliate investments | $ | 3,073 | $ | 4,693 | $ | 6,269 | $ | 9,400 | ||||||||
| Affiliate investments | 1,188 | 1,632 | 2,494 | 3,311 | ||||||||||||
| Control investments | 98 | 103 | 196 | 206 | ||||||||||||
| Total interest and fee income | 4,359 | 6,428 | 8,959 | 12,917 | ||||||||||||
| Payment-in-kind interest and dividend income: | ||||||||||||||||
| Non-control/non-affiliate investments | 24 | 378 | 95 | 714 | ||||||||||||
| Affiliate investments | 99 | 188 | 198 | 368 | ||||||||||||
| Total payment-in-kind interest and dividend income | 123 | 566 | 293 | 1,082 | ||||||||||||
| Dividend income: | ||||||||||||||||
| Non-control/non-affiliate investments | 560 | - | 560 | - | ||||||||||||
| Affiliate investments | - | - | 155 | 25 | ||||||||||||
| Total dividend income | 560 | - | 715 | 25 | ||||||||||||
| Interest income from cash and cash equivalents | 2 | 5 | 3 | 49 | ||||||||||||
| Total investment income | 5,044 | 6,999 | 9,970 | 14,073 | ||||||||||||
| EXPENSES | ||||||||||||||||
| Interest and financing expenses | 2,728 | 4,885 | 5,765 | 8,711 | ||||||||||||
| Base management fee | 1,272 | 1,666 | 2,670 | 3,423 | ||||||||||||
| Administrative service fees | 350 | 350 | 700 | 700 | ||||||||||||
| General and administrative expenses | 660 | 707 | 1,584 | 1,861 | ||||||||||||
| Total expenses | 5,010 | 7,608 | 10,719 | 14,695 | ||||||||||||
| NET INVESTMENT INCOME (LOSS) | 34 | (609 | ) | (749 | ) | (622 | ) | |||||||||
| REALIZED AND UNREALIZED LOSS (GAIN) ON INVESTMENTS | ||||||||||||||||
| Net realized gain (loss) on investments: | ||||||||||||||||
| Non-control/non-affiliate investments | 4,732 | (14,142 | ) | (9,291 | ) | (13,174 | ) | |||||||||
| Affiliate investments | 2,215 | 1,341 | 2,215 | 1,341 | ||||||||||||
| Control investments | - | (484 | ) | - | (484 | ) | ||||||||||
| Net realized gain (loss) on investments | 6,947 | (13,285 | ) | (7,076 | ) | (12,317 | ) | |||||||||
| Net unrealized (depreciation) appreciation investments: | ||||||||||||||||
| Non-control/non-affiliate investments | (12,774 | ) | 16,993 | 10,438 | (11,532 | ) | ||||||||||
| Affiliate investments | 60 | (1,003 | ) | 4,032 | (14,731 | ) | ||||||||||
| Control investments | (1,006 | ) | 1,004 | (1,030 | ) | (138 | ) | |||||||||
| Net unrealized (depreciation) appreciation on investments | (13,720 | ) | 16,994 | 13,440 | (26,401 | ) | ||||||||||
| Total net realized and unrealized (loss) gain on investments | (6,773 | ) | 3,709 | 6,364 | (38,718 | ) | ||||||||||
| Net realized loss on extinguishment of debt | (815 | ) | - | (815 | ) | - | ||||||||||
| NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (7,554 | ) | $ | 3,100 | $ | 4,800 | $ | (39,340 | ) | ||||||
| NET (DECREASE) INCREASE IN NET ASSETS PER SHARE RESULTING FROM OPERATIONS – BASIC AND DILUTED(1) | $ | (2.79 | ) | $ | 1.14 | $ | 1.77 | $ | (14.53 | ) | ||||||
| WEIGHTED AVERAGE COMMON STOCK OUTSTANDING – BASIC AND DILUTED (1) | 2,711,068 | 2,711,081 | 2,711,068 | 2,707,256 | ||||||||||||
| DISTRIBUTIONS PAID PER SHARE (2) | $ | - | $ | - | $ | - | $ | 1.50 | ||||||||
| (1) Basic and diluted shares of the Company’s common stock have been adjusted for the three and six months ended June 30, 2020 to reflect the one-for-six reverse stock split effected on August 21, 2020 on a retroactive basis, as described in Note 1. |
| (2) Dividends paid per share of the Company's common stock have been adjusted for the three and six months ended June 30, 2020 to reflect the one-for-six reverse stock split effected on August 21, 2020 on a retroactive basis, as described in Note 1 to the Company’s Consolidated Financial Statements (unaudited), included in the Company’s quarterly report on Form 10-Q for the period ended June 30, 2021. |
FAQ
What were LRFC's Q2 2021 financial results?
How much did LRFC repay in debentures during Q2 2021?
What was the net change in unrealized depreciation for LRFC in Q2 2021?
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When will LRFC host its next conference call?
