Release Date: November 12, 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) successfully exited its largest investment, generating $17.5 million in cash, which was $2 million above its previously reported fair value.
- The company declared a fourth-quarter distribution of 36¢ per share, doubling the dividend compared to the first quarter of 2023.
- LRFC amended and extended its revolving credit facility with Keybank, reducing applicable margins and extending maturity dates, which lowered the overall cost of capital.
- The underlying credit performance of LRFC's portfolio remained stable, with no new investments placed on non-accrual status.
- The company has $35.9 million of unused borrowing capacity available for deployment in new investments, providing financial flexibility.
Negative Points
- Logan Ridge Finance Corp (LRFC) experienced a decrease in net asset value, which fell by $2.4 million compared to the prior quarter.
- Investment income decreased by $0.3 million compared to the previous quarter, primarily due to the absence of a non-recurring dividend.
- The fair value of non-accrual investments decreased from $10 million to $8.2 million, indicating further markdowns.
- The company repurchased only a small number of shares, which was seen as a missed opportunity given the current discounts.
- Net realized and unrealized losses on the portfolio contributed to the decrease in net asset value.
Q & A Highlights
Q: Were there any non-recurring items this quarter?
A: There were not. - Brandon Satoren, CFO
Q: What does the sale of the nth degree investment mean for integrating Logan Ridge with other vehicles?
A: The sale removes a significant barrier, allowing us to move forward with integration plans. - Ted Goldthorpe, CEO
Q: The revised credit facility seems to have a higher advance rate. Is the bank more accommodating despite potential commercial real estate issues?
A: Yes, our financing sources are more accommodating and aggressive on terms, reflecting increased competition for our business. - Patrick Schafer, CIO
Q: Can you comment on deployment in the fourth quarter, especially with Logan being less leveraged after the nth degree pay down?
A: Logan now has more flexibility to participate in lower-yielding but attractive credit opportunities, enhancing its market buyer position. - Patrick Schafer, CIO
Q: Why was the share repurchase program limited, and will it be amended given the lower leverage?
A: The program was set before the nth degree sale, limiting its size. Future programs will consider current leverage and liquidity. - Patrick Schafer, CIO
Q: Are there any expectations for repayments on the remaining equity positions?
A: The market is favorable for M&A, and we believe it makes sense for the owners to consider exits, though we don't control these scenarios. - Patrick Schafer, CIO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
