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 CommentaryTed 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 OperationsOur 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 InvestmentsThe 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 atAmortized Cost     Amortized CostPercentage ofTotal Portfolio     Investments atFair Value     Fair ValuePercentage ofTotal 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 atAmortized Cost     Amortized CostPercentage ofTotal Portfolio     Investments atFair Value     Fair ValuePercentage ofTotal 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 ininterest 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 CorporationLogan 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 CreditBC 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 Corporation650 Madison Avenue, 3rd FloorNew York, NY 10022

Brandon SatorenChief Financial Officer Brandon.Satoren@bcpartners.com (212) 891-2880

Lena Cati The Equity Group Inc.lcati@equityny.com (212) 836-9611

Val FerraroThe Equity Group Inc.vferraro@equityny.com (212) 836-9633

Logan Ridge Finance CorporationConsolidated 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 CorporationConsolidated 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.

Logan Ridge Finance (NASDAQ:LRFC)
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