- Investment Income: $5.1 million for the quarter ended September 30, 2024, a decrease from $5.4 million in the prior quarter.
- Total Operating Expenses: Decreased to $4.2 million from $4.6 million in the prior quarter.
- Net Investment Income: $1 million or 37 per share, up from $0.8 million or 28 per share last quarter.
- Net Asset Value (NAV): $86.3 million, a decrease from $88.7 million in the prior quarter; $32.31 per share, down from $33.13 per share.
- Portfolio Fair Value: Approximately $176.5 million as of September 30, 2024, with exposure to 59 portfolio companies.
- Debt Investment Portfolio: 86.8% of total portfolio at fair value with a weighted average annualized yield of approximately 12.3% excluding non-accruals and CLOs.
- Cash and Cash Equivalents: $5 million as of quarter end.
- Unused Borrowing Capacity: $35.9 million available for new investments.
- Quarterly Distribution: Declared a fourth-quarter distribution of 36 per share.
- Warning! GuruFocus has detected 2 Warning Sign with LRFC.
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 (NASDAQ:LRFC) 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 (NASDAQ: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.
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