• Total Investment Income: $20.9 million for the full year 2024.
• Net Investment Income: $4.2 million or $1.56 per share for the full year 2024.
• Investment Income (Q4 2024): $5.4 million, up from $5.1 million in Q3 2024.
• Total Expenses (Q4 2024): $3.9 million, down from $4.2 million in Q3 2024.
• Net Investment Income (Q4 2024): $1.5 million or $0.56 per share, an increase from $1.0 million or $0.37 per share in Q3 2024.
• Net Asset Value (NAV): $85.1 million as of December 31, 2024, down from $86.3 million as of September 30, 2024.
• Cash and Cash Equivalents: $15 million as of December 31, 2024.
• Unused Borrowing Capacity: $26.2 million as of December 31, 2024.
• Portfolio Fair Value: $172.3 million as of December 31, 2024.
• Dividend: $0.36 per share for Q4 2024.

• Warning! GuruFocus has detected 1 Warning Sign with LRFC.

Release Date: March 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Logan Ridge Finance Corp (NASDAQ:LRFC) achieved the highest total investment income and net investment income in its history, with $20.9 million and $4.2 million respectively.
• The successful sale of the largest equity position, Nth Degree, for $17.5 million in cash was a significant catalyst for the accretive combination with Portman Ridge.
• LRFC exited its second largest nonyielding equity investment in GA Communications, furthering its strategy to rotate out of legacy equity portfolios.
• The company strengthened its balance sheet by amending and extending its revolving credit facility with KeyBank, reducing financing costs and increasing financial flexibility.
• The merger with Portman Ridge Finance Corporation is expected to provide greater scale, improved operating efficiencies, and increased trading volume, creating incremental value for shareholders.

Negative Points

• Net asset value decreased by $1.2 million or 1.4% compared to the prior quarter, reflecting a decrease in shareholder value.
• The company had four debt investments across three portfolio companies on nonaccrual status, representing 9.0% of the investment portfolio at cost.
• Despite improvements, the equity portfolio still represented 13.8% of the portfolio at fair value, indicating ongoing exposure to non-yielding assets.
• Total expenses for the quarter were $3.9 million, although decreased, they still represent a significant portion of income.
• The merger process requires shareholder approval, which introduces uncertainty and potential delays in realizing the anticipated benefits.

Q & A Highlights

Q: Do you anticipate the Logan portfolio to be subsumed into Portman Ridge, or will there be further reductions in equity exposure? How do you see the combined portfolio going forward? A: Ted Goldthorpe, CEO: It's going to be a straight merger. We have exited another equity position this quarter, and reducing equity exposure remains a focus. We plan to blend the portfolios together without leaving behind a Subco or CVR. Patrick Schafer, CIO: The equity percentage of Logan will decrease further, and we aim to reduce equity exposures and reinvest proceeds. Portman has a different strategy, focusing on yield-generating equity positions.

Q: Will there be significant overlaps in Board members between Logan Ridge and Portman Ridge, or will it be a combination of two different groups? A: Patrick Schafer, CIO: The Logan Board members have a 100% overlap with Portman. There are additional board members on Portman, but all Logan Board members are existing Portman Board members, effectively eliminating double Director duty.

Q: Has there been any consideration of compensating Board members purely in stock to align interests, given the merger and strategic discussions? A: Ted Goldthorpe, CEO: We haven't discussed this. Due to the 40 Act Rule, management cannot be paid in stock, and this might apply to the Board as well. Historically, we've looked into paying executives in stock, but it's not allowed under the 40 Act. We would need to check if this applies to the Board.

Q: What is the current status of Logan Ridge's investment portfolio and its composition? A: Patrick Schafer, CIO: As of December 31, 2024, the fair value of Logan's portfolio was approximately $172.3 million with exposure to 59 portfolio companies. The debt investment portfolio represented 83.3% of the total portfolio at fair value, with a weighted average annualized yield of approximately 10.7%. First lien debt represented 64.4% of the total portfolio on a cost basis.

Q: Can you provide an update on Logan Ridge's financial results for the fourth quarter of 2024? A: Brandon Satoren, CFO: For the quarter ended December 31, 2024, Logan Ridge generated $5.4 million of investment income, a $0.3 million increase from the prior quarter. Total expenses decreased by $0.3 million to $3.9 million. Net investment income for the fourth quarter was $1.5 million or $0.56 per share. The net asset value as of December 31, 2024, was $85.1 million, a $1.2 million decrease from the prior quarter.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.