Logan Ridge Finance Corporation Announces Second Quarter 2024 Financial Results
Reports Solid Results with Total Investment Income of $5.4 Million and Net Investment Income of $0.28 Per Share;
Net Asset Value of $33.13 Per Share
Declared a Distribution of $0.33 Per Share for the Third Quarter of 2024
NEW YORK, Aug. 08, 2024 (GLOBE NEWSWIRE) -- Logan Ridge Finance Corporation ("Logan Ridge", "Logan", "LRFC", "Company", "we", "us" or "our") (NASDAQ:LRFC) announced today its financial results for the second quarter ended June 30, 2024.
Second Quarter 2024 Highlights
- Total Investment Income increased to $5.4 million for the quarter ended June 30, 2024, from $5.0 million reported for the quarter ended March 31, 2024.
- Net Investment Income ("NII") decreased to $0.8 million, or $0.28 per share, for the quarter ended June 30, 2024 as compared to $0.9 million or $0.35 per share reported in the quarter ended March 31, 2024. Net investment income for the current quarter includes $0.3 million, or $0.10 per share, of certain non-recurring incremental professional fees and other expenses.
- Net asset value decreased to $33.13 per share as of June 30, 2024, from $33.71 per share as of March 31, 2024.
- Made approximately $1.5 million of investments and had approximately $5.6 million in repayments and sales of investments, resulting in net repayments and sales of approximately $4.1 million during the quarter ended June 30, 2024.
Subsequent Events
- On August 7, 2024, the Company's Board of Directors approved a third quarter distribution of $0.33 per share, payable on August 30, 2024 to stockholders of record as of August 22, 2024.
Management Commentary
Ted Goldthorpe, Chief Executive Officer and President of Logan Ridge, said, "I am pleased to announce another solid quarter and half year of financial performance for Logan Ridge. The first half results are highlighted by net deployment of $4.8 million, along with an increase in total investment income during the second quarter of $0.4 million to $5.4 million. The underlying credit performance of our portfolio has remained strong, with no new investments being placed on non-accrual status during the quarter.
Further, the Company's strong financial position and the outlook for the long-term earnings power of the portfolio has allowed the Board of Directors to approve a dividend of $0.33 per share for the third quarter of 2024.
Looking forward to the second half of 2024, we continue to see attractive opportunities in our pipeline to deploy our available capital. We believe we are well positioned to continue to support the growth of our existing portfolio companies and we will remain opportunistic deployers of capital in the current market environment."
Selected Financial Information
- Total investment income for the quarter ended June 30, 2024, increased by $0.1 million, to $5.4 million, compared to $5.3 million for the second quarter of 2023.
- Total operating expenses for the quarter ended June 30, 2024, increased by $0.3 million, to $4.6 million, compared to $4.3 million for the second quarter of 2023. Total operating expenses for the second quarter of 2024 includes $0.3 million of certain non-recurring incremental professional fees and other expenses.
- Net investment income for the quarter ended June 30, 2024, was $0.8 million, or $0.28 per share, compared to $1.0 million, or $0.38 per share, for the second quarter of 2023. Net investment income for the quarter ended June 30, 2024 includes $0.3 million, or $0.10 per share, of certain non-recurring incremental professional fees and other expenses.
- Net asset value as of June 30, 2024, was $88.7 million, or $33.13 per share, compared to $90.2 million, or $33.71 per share, as of March 31, 2024.
- Cash and cash equivalents as of June 30, 2024, were $4.3 million compared to $8.3 million as of March 31, 2024.
- The investment portfolio as of June 30, 2024, consisted of investments in 61 portfolio companies with a fair value of approximately $195.6 million. This compares to 62 portfolio companies with a fair value of approximately $200.1 million as of March 31, 2024.
- Deployment was judicious and prudent during the quarter ended June 30, 2024. During the quarter, the Company made approximately $1.5 million in investments and had $5.6 million in repayments and sales of investments, resulting in net repayments and sales of approximately $4.1 million for the quarter.
- The debt investment portfolio as of June 30, 2024 represented 80.0% of the fair value of the total portfolio, with a weighted average annualized yield of approximately 11.4% (excluding income from non-accruals and collateralized loan obligations), compared to a debt investment portfolio of approximately 80.8% with a weighted average annualized yield of approximately 11.4% (excluding income from non-accruals and collateralized loan obligations) as of March 31, 2024. As of June 30, 2024, 11.9% of the fair value of the debt investment portfolio was bearing a fixed rate of interest, compared to 11.5% of the fair value of the debt investment portfolio as of March 31, 2024.
- Non-Accruals: As of June 30, 2024, the Company had debt investments in three portfolio companies on non-accrual status with an amortized cost and fair value of $17.2 million and $10.1 million, respectively, representing 8.5% and 5.2% of the investment portfolio's amortized cost and fair value, respectively. This compares to debt investments in the same three portfolio companies on non-accrual status with an aggregate amortized cost and fair value of $17.2 million and $10.6 million, respectively, representing 8.3% and 5.3% of the investment portfolio's amortized cost and fair value, respectively, at March 31, 2024.
- Asset coverage ratio as of June 30, 2024 was 176%.
Results of Operations
Our operating results for the three and six months ended June 30, 2024 and June 30, 2023 were as follows (dollars in thousands):
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Total investment income | $ | 5,370 | $ | 5,344 | $ | 10,373 | $ | 10,600 | ||||||||
| Total expenses | 4,620 | 4,305 | 8,676 | 8,488 | ||||||||||||
| Net investment income | 750 | 1,039 | 1,697 | 2,112 | ||||||||||||
| Net realized gain (loss) on investments | (200 | ) | (2,362 | ) | 87 | (3,868 | ) | |||||||||
| Net change in unrealized appreciation (depreciation) on investments | (1,092 | ) | 4,563 | (417 | ) | 4,346 | ||||||||||
| Net realized gain (loss) on extinguishment of debt | (116 | ) | — | (174 | ) | — | ||||||||||
| Net increase (decrease) in net assets resulting from operations | $ | (658 | ) | $ | 3,240 | $ | 1,193 | $ | 2,590 | |||||||
Investment income
The composition of our investment income for the three and six months ended June 30, 2024 and June 30, 2023 was as follows (dollars in thousands):
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Interest income | $ | 4,635 | $ | 4,907 | $ | 9,268 | $ | 9,675 | ||||||||
| Payment-in-kind interest | 518 | 319 | 871 | 783 | ||||||||||||
| Dividend income | 17 | 19 | 34 | 33 | ||||||||||||
| Other income | 200 | 99 | 200 | 109 | ||||||||||||
| Total investment income | $ | 5,370 | $ | 5,344 | $ | 10,373 | $ | 10,600 | ||||||||
Fair Value of Investments
The composition of our investments as of June 30, 2024 and December 31, 2023, at amortized cost and fair value of investments was as follows (dollars in thousands):
| June 30, 2024 | Investments at Amortized Cost | Amortized Cost Percentage of Total Portfolio | Investments at Fair Value | Fair Value Percentage of Total Portfolio | ||||||||||||
| First Lien Debt | $ | 133,516 | 65.8 | % | $ | 125,133 | 64.0 | % | ||||||||
| Second Lien Debt | 9,352 | 4.6 | % | 8,012 | 4.1 | % | ||||||||||
| Subordinated Debt | 26,893 | 13.3 | % | 23,218 | 11.9 | % | ||||||||||
| Collateralized Loan Obligations | 1,770 | 0.9 | % | 1,596 | 0.8 | % | ||||||||||
| Joint Venture | 393 | 0.2 | % | 407 | 0.2 | % | ||||||||||
| Equity | 30,906 | 15.2 | % | 37,187 | 19.0 | % | ||||||||||
| Total | $ | 202,830 | 100.0 | % | $ | 195,553 | 100.0 | % | ||||||||
| December 31, 2023 | Investments at Amortized Cost | Amortized Cost Percentage of Total Portfolio | Investments at Fair Value | Fair Value Percentage of Total Portfolio | ||||||||||||
| First Lien Debt | $ | 128,537 | 65.4 | % | $ | 124,007 | 65.4 | % | ||||||||
| Second Lien Debt | 8,968 | 4.6 | % | 7,918 | 4.2 | % | ||||||||||
| Subordinated Debt | 26,573 | 13.5 | % | 23,548 | 12.4 | % | ||||||||||
| Collateralized Loan Obligations | 1,600 | 0.8 | % | 1,600 | 0.8 | % | ||||||||||
| Joint Venture | 440 | 0.2 | % | 450 | 0.2 | % | ||||||||||
| Equity | 30,400 | 15.5 | % | 32,135 | 17.0 | % | ||||||||||
| Total | $ | 196,518 | 100.0 | % | $ | 189,658 | 100.0 | % | ||||||||
Interest Rate Risk
Based on our consolidated statements of assets and liabilities as of June 30, 2024, 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 | $ | 4,392 | $ | (1,620 | ) | $ | 2,772 | ||||
| Up 200 basis points | 2,928 | (1,080 | ) | 1,848 | |||||||
| Up 100 basis points | 1,464 | (540 | ) | 924 | |||||||
| Down 100 basis points | (1,464 | ) | 540 | (924 | ) | ||||||
| Down 200 basis points | (2,928 | ) | 1,080 | (1,848 | ) | ||||||
| Down 300 basis points | (4,307 | ) | 1,620 | (2,687 | ) | ||||||
Conference Call and Webcast
We will hold a conference call on Friday, August 9, 2024, at 11:00 a.m. Eastern Time to discuss the second quarter 2024 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 4533143.
A replay of this conference call will be available shortly after the live call through August 16, 2024.
A live audio webcast of the conference call can be accessed via the Internet, on a listen-only basis on the 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/wk9wbtnf. 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. ("MLC") is an alternative asset management company that is focused on public and private debt securities in the North American market. MLC seeks to source and actively manage loans and other debt-like securities with credit-oriented characteristics. MLC 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 in private equity, private credit and real estate strategies. Established in 1986, BC Partners has played an active role in developing the European buyout market for three decades. Today, BC Partners executives operate across markets as an integrated team through the firm's offices in North America and Europe. For more information, please visit www.bcpartners.com.
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, 3rd Floor
New York, NY 10022
Brandon Satoren
Chief Financial Officer
[email protected]
(212) 891-2880
Lena Cati
The Equity Group Inc.
[email protected]
(212) 836-9611
Val Ferraro
The Equity Group Inc.
[email protected]
(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, 2024 | As of December 31, 2023 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Investments at fair value: | ||||||||
| Non-control/non-affiliate investments (amortized cost of $172,733 and $170,972, respectively) | $ | 157,181 | $ | 161,880 | ||||
| Affiliate investments (amortized cost of $30,097 and $25,546, respectively) | 38,372 | 27,778 | ||||||
| Total investments at fair value (amortized cost of $202,830 and $196,518, respectively) | 195,553 | 189,658 | ||||||
| Cash and cash equivalents | 4,284 | 3,893 | ||||||
| Interest and dividend receivable | 2,017 | 1,374 | ||||||
| Prepaid expenses | 1,783 | 2,163 | ||||||
| Other assets | 687 | — | ||||||
| Total assets | $ | 204,324 | $ | 197,088 | ||||
| LIABILITIES | ||||||||
| 2026 Notes (net of deferred financing costs and original issue discount of $876 and $1,057, respectively) | $ | 49,124 | $ | 48,943 | ||||
| 2032 Convertible Notes (net of deferred financing costs and original issue discount of $751 and $999, respectively) | 11,249 | 14,001 | ||||||
| KeyBank Credit Facility (net of deferred financing costs of $812 and $982, respectively) | 52,293 | 38,571 | ||||||
| Management and incentive fees payable | 909 | 869 | ||||||
| Interest and financing fees payable | 1,092 | 949 | ||||||
| Accounts payable and accrued expenses | 996 | 833 | ||||||
| Payable for unsettled trades | — | 3,747 | ||||||
| Total liabilities | $ | 115,663 | $ | 107,913 | ||||
| Commitments and contingencies | ||||||||
| NET ASSETS | ||||||||
| Common stock, par value $0.01, 100,000,000 shares of common stock authorized, 2,676,062 and 2,674,698 shares of common stock issued and outstanding, respectively | $ | 27 | $ | 27 | ||||
| Capital in excess of par value | 188,437 | 188,405 | ||||||
| Total distributable loss | (99,803 | ) | (99,257 | ) | ||||
| Total net assets | $ | 88,661 | $ | 89,175 | ||||
| Total liabilities and net assets | $ | 204,324 | $ | 197,088 | ||||
| Net asset value per share | $ | 33.13 | $ | 33.34 | ||||
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, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| INVESTMENT INCOME | ||||||||||||||||
| Interest income: | ||||||||||||||||
| Non-control/non-affiliate investments | $ | 4,526 | $ | 4,773 | $ | 9,159 | $ | 9,377 | ||||||||
| Affiliate investments | 109 | 134 | 109 | 298 | ||||||||||||
| Total interest income | 4,635 | 4,907 | 9,268 | 9,675 | ||||||||||||
| Payment-in-kind interest and dividend income: | ||||||||||||||||
| Non-control/non-affiliate investments | 476 | 271 | 812 | 687 | (1) | |||||||||||
| Affiliate investments | 42 | 48 | 59 | 96 | ||||||||||||
| Total payment-in-kind interest and dividend income | 518 | 319 | 871 | 783 | ||||||||||||
| Dividend income: | ||||||||||||||||
| Affiliate investments | 17 | 19 | 34 | 33 | ||||||||||||
| Total dividend income | 17 | 19 | 34 | 33 | ||||||||||||
| Other income: | ||||||||||||||||
| Non-control/non-affiliate investments | 46 | 99 | 46 | 109 | ||||||||||||
| Affiliate investments | 154 | — | 154 | — | ||||||||||||
| Total other income | 200 | 99 | 200 | 109 | ||||||||||||
| Total investment income | 5,370 | 5,344 | 10,373 | 10,600 | ||||||||||||
| EXPENSES | ||||||||||||||||
| Interest and financing expenses | 2,303 | 2,236 | 4,310 | 4,305 | ||||||||||||
| Base management fee | 909 | 946 | 1,802 | 1,876 | ||||||||||||
| Directors' expense | 175 | 135 | 325 | 270 | ||||||||||||
| Administrative service fees | 255 | 224 | 456 | 481 | ||||||||||||
| General and administrative expenses | 978 | 764 | 1,783 | 1,556 | ||||||||||||
| Total expenses | 4,620 | 4,305 | 8,676 | 8,488 | ||||||||||||
| NET INVESTMENT INCOME | 750 | 1,039 | 1,697 | 2,112 | ||||||||||||
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||||||||||||||
| Net realized gain (loss) on investments: | ||||||||||||||||
| Non-control/non-affiliate investments | (200 | ) | (2,362 | ) | 87 | (3,868 | ) | |||||||||
| Net realized gain (loss) on investments | (200 | ) | (2,362 | ) | 87 | (3,868 | ) | |||||||||
| Net change in unrealized appreciation (depreciation) on investments: | ||||||||||||||||
| Non-control/non-affiliate investments | (2,556 | ) | 510 | (6,460 | ) | (740 | ) | |||||||||
| Affiliate investments | 1,464 | 4,053 | 6,043 | 5,086 | ||||||||||||
| Net change in unrealized appreciation (depreciation) on investments | (1,092 | ) | 4,563 | (417 | ) | 4,346 | ||||||||||
| Total net realized and change in unrealized gain (loss) on investments | (1,292 | ) | 2,201 | (330 | ) | 478 | ||||||||||
| Net realized loss on extinguishment of debt | (116 | ) | — | (174 | ) | — | ||||||||||
| NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | (658 | ) | $ | 3,240 | $ | 1,193 | $ | 2,590 | |||||||
| NET INCREASE (DECREASE) IN NET ASSETS PER SHARE RESULTING FROM OPERATIONS – BASIC | $ | (0.25 | ) | $ | 1.20 | $ | 0.45 | $ | 0.96 | |||||||
| WEIGHTED AVERAGE COMMON STOCK OUTSTANDING – BASIC | 2,676,018 | 2,703,871 | 2,677,187 | 2,707,399 | ||||||||||||
| NET INCREASE (DECREASE) IN NET ASSETS PER SHARE RESULTING FROM OPERATIONS – DILUTED | $ | (0.25 | ) | $ | 1.07 | $ | 0.45 | $ | 0.94 | |||||||
| WEIGHTED AVERAGE COMMON STOCK OUTSTANDING – DILUTED | 2,676,018 | 3,243,374 | 2,677,187 | 3,246,902 | ||||||||||||
| DISTRIBUTIONS PAID PER SHARE | $ | 0.33 | $ | 0.22 | $ | 0.65 | $ | 0.40 | ||||||||
(1) During the six months ended June 30, 2023, the Company received $0.2 million of non-recurring income that was paid-in-kind and included in this financial statement line item.
