Logan Ridge Finance Corporation (“LRFC”, “Logan Ridge” or the
“Company”) (Nasdaq: LRFC) today announced its financial results for
the third quarter ended September 30, 2022.
Third Quarter 2022 Milestones
- Reported positive Net Investment
Income (NII) of $0.2 million or $0.07 per share, an increase of
$1.1 million compared to the preceding 2022 quarter.
- Investment income increased $0.4
million due to net deployment as well as increase in base
rate.
- Interest expense decreased $0.6
million due to the refinancing of the entire debt capital structure
over the last year.
- Gross and net leverage increased to
1.1x and 1.0x, respectively, compared to 1.0x and 0.8x,
respectively, as of the preceding 2022 quarter.
- Made first capital commitment to
the Great Lakes Joint Venture. Management plans to increase its
commitment to this investment vehicle as it continues to
successfully exit legacy equity portfolio positions.
- Subsequent to quarter end, LRFC
successfully exited equity investment in Burke America Parts Group,
LLC for cash proceeds of $2.7 million, further reducing the
Company’s non-yielding equity portfolio.
Management Commentary
Ted Goldthorpe, Chief Executive Officer and
President of LRFC, said, “The third quarter of 2022 was a
significant milestone for Logan Ridge and puts the Company closer
to its goal of reinstating the dividend, as it marks the first
quarter of positive NII for the company since Mount Logan
Management took over as its investment advisor. The NII this
quarter was largely a result of the hard work we have put in over
the past 15 months to execute on our strategic initiatives. Also,
during the third quarter, Logan Ridge made its inaugural capital
commitment to our Great Lakes Joint Venture, an investment which we
will look to increase as we continue to exit the legacy equity
portfolio. Heading into the fourth quarter, our portfolio is stable
and non-accruals remain low as a percentage of the total portfolio
at fair value. Under our stewardship, the Company has greatly
increased the diversity of the portfolio and reduced the average
position size. Due to the current strength of our portfolio and the
execution on our growth initiatives, we believe we are well
positioned to take advantage of new opportunities arising from the
current credit environment. Over the coming quarters, we will
remain laser focused on growing the portfolio, seeking to achieve
our target leverage ratio of 1.3x-1.4x, increasing the earnings
power of the portfolio, and improving our overall financial
performance.”
Selected Third Quarter 2022 Financial
Information
- Total investment income was $3.8 million for
the third quarter of 2022 as compared to $3.4 million for the third
quarter of 2021.
- NII was $0.2
million for the third quarter of 2022. This compares to a net
investment loss of $1.5 million reported in the third quarter of
2021.
- Total operating
expenses for the third quarter of 2022 declined to $3.6
million as compared to $4.9 million in the third quarter of
2021.
- The investment
portfolio as of September 30, 2022 consisted of
investments in 54 portfolio companies with a fair value of
approximately $193.1 million. This compares to 33 portfolio
companies with a fair value of approximately $195.4 million as of
September 30, 2021.
- Deployment
remained strong. During the third quarter, the Company made
approximately $36.7 million of investments and had approximately
$17.1 million in repayment and sales, resulting in net deployment
of approximately $19.6 million for the period.
- Net asset value as
of September 30, 2022 was $98.2 million, or $36.21 per share, as
compared to $107.1 million, or $39.48 per share, as of December 31,
2021.
- Cash and
cash equivalents as of September 30, 2022 were $11.3
million as compared to $39.1 million as of December 31, 2021.
- Debt investment
portfolio as of September 30, 2022, which represented
79.4% of our total portfolio at fair value, had a weighted average
annualized yield of approximately 8.9% (excluding non-accruals and
collateralized loan obligations). As of December 31, 2021, our debt
investment portfolio, which represented 67.4% of the fair value of
our total portfolio, had a weighted average annualized yield of
approximately 8.1% (excluding non-accruals and collateralized loan
obligations). As of September 30, 2022 and December 31, 2021, 23.7%
and 22.8% of the fair value of our debt investment portfolio was
bearing a fixed rate of interest, respectively.
- Non-yielding
equity portfolio reduced. As of September 30, 2022, the
non-yielding equity portfolio had declined to 17.6% and 17.0% of
the Company’s total investments on a cost and fair value basis,
respectively.
- No new
non-accruals as of September 30, 2022. The Company had
debt investments in two portfolio companies on non-accrual status
with an aggregate amortized cost of $12.1 million and an aggregate
fair value of $8.9 million, which represented 6.0% and 4.6% of the
investment portfolio, respectively as of September 30, 2022. As of
December 31, 2021, we had debt investments in two portfolio
companies on non-accrual status with aggregate amortized cost of
$12.7 million and an aggregate fair value of $7.6 million, which
represented 6.7% and 3.8% of the investment portfolio,
respectively.
Results of OperationsOperating
results for the three and nine months ended September 30, 2022
and 2021 were as follows:
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
$ in thousands |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Total investment income |
|
$ |
3,748 |
|
|
$ |
3,372 |
|
|
$ |
10,389 |
|
|
$ |
13,342 |
|
Total expenses, net of incentive
fee waiver |
|
|
3,566 |
|
|
|
4,882 |
|
|
|
12,186 |
|
|
|
15,601 |
|
Net investment income (loss) |
|
|
182 |
|
|
|
(1,510 |
) |
|
|
(1,797 |
) |
|
|
(2,259 |
) |
Net realized (loss) gain on
investments |
|
|
(5,192 |
) |
|
|
7,425 |
|
|
|
10,274 |
|
|
|
349 |
|
Net change in unrealized
appreciation (depreciation) on investments |
|
|
2,049 |
|
|
|
(9,401 |
) |
|
|
(17,330 |
) |
|
|
4,039 |
|
Net realized loss on
extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(815 |
) |
Net (decrease) increase in net
assets resulting from operations |
|
$ |
(2,961 |
) |
|
$ |
(3,486 |
) |
|
$ |
(8,853 |
) |
|
$ |
1,314 |
|
Investment IncomeThe
composition of investment income for the three and nine months
ended September 30, 2022 and 2021 was as follows:
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
$ in thousands |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Interest income |
|
$ |
3,373 |
|
|
$ |
3,248 |
|
|
$ |
9,566 |
|
|
$ |
11,969 |
|
Payment-in-kind interest |
|
|
297 |
|
|
|
100 |
|
|
|
737 |
|
|
|
393 |
|
Dividend income |
|
|
— |
|
|
|
24 |
|
|
|
— |
|
|
|
739 |
|
Other income |
|
|
78 |
|
|
|
— |
|
|
|
86 |
|
|
|
241 |
|
Total investment income |
|
$ |
3,748 |
|
|
$ |
3,372 |
|
|
$ |
10,389 |
|
|
$ |
13,342 |
|
Fair Value of InvestmentsThe
following table summarizes the amortized cost and the fair value of
investments as of September 30, 2022:
($ in thousands) |
|
Investments atAmortized Cost |
|
|
Amortized CostPercentage
ofTotal Portfolio |
|
|
Investments atFair Value |
|
|
Fair ValuePercentage
ofTotal Portfolio |
|
First Lien Debt |
|
$ |
124,030 |
|
|
|
61.2 |
% |
|
$ |
119,426 |
|
|
|
61.9 |
% |
Second Lien Debt |
|
|
9,020 |
|
|
|
4.4 |
% |
|
|
7,773 |
|
|
|
4.0 |
% |
Subordinated Debt |
|
|
26,501 |
|
|
|
13.1 |
% |
|
|
26,096 |
|
|
|
13.5 |
% |
Collateralized Loan
Obligations |
|
|
7,267 |
|
|
|
3.6 |
% |
|
|
6,664 |
|
|
|
3.5 |
% |
Joint Venture |
|
|
277 |
|
|
|
0.1 |
% |
|
|
270 |
|
|
|
0.1 |
% |
Equity and Warrants |
|
|
35,648 |
|
|
|
17.6 |
% |
|
|
32,891 |
|
|
|
17.0 |
% |
Total |
|
$ |
202,743 |
|
|
|
100.0 |
% |
|
$ |
193,120 |
|
|
|
100.0 |
% |
The following table summarizes the amortized
cost and the fair value of investments as of December 31, 2021:
($ in thousands) |
|
Investments atAmortized Cost |
|
|
Amortized CostPercentage
ofTotal Portfolio |
|
|
Investments atFair Value |
|
|
Fair ValuePercentage
ofTotal Portfolio |
|
First Lien Debt |
|
$ |
103,667 |
|
|
|
54.4 |
% |
|
$ |
98,251 |
|
|
|
49.6 |
% |
Second Lien Debt |
|
|
30,048 |
|
|
|
15.8 |
% |
|
|
30,190 |
|
|
|
15.2 |
% |
Subordinated Debt |
|
|
5,050 |
|
|
|
2.6 |
% |
|
|
5,050 |
|
|
|
2.6 |
% |
Equity and Warrants |
|
|
51,717 |
|
|
|
27.2 |
% |
|
|
64,698 |
|
|
|
32.6 |
% |
Total |
|
$ |
190,482 |
|
|
|
100.0 |
% |
|
$ |
198,189 |
|
|
|
100.0 |
% |
Interest Rate RiskBased on our
September 30, 2022 consolidated statement of assets and
liabilities, 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:
Basis Point Change |
Increase(decrease) in interest
income |
(Increase)decrease
ininterest expense |
Increase(decrease) in net
income |
Up 300 basis points |
$ |
3,952 |
|
$ |
(1,392 |
) |
$ |
2,560 |
|
Up 200 basis
points |
|
2,635 |
|
|
(928 |
) |
|
1,707 |
|
Up 100 basis
points |
|
1,317 |
|
|
(464 |
) |
|
853 |
|
Down 100 basis
points |
|
(1,317 |
) |
|
464 |
|
|
(853 |
) |
Down 200 basis
points |
|
(2,520 |
) |
|
928 |
|
|
(1,592 |
) |
Down 300 basis
points |
|
(3,174 |
) |
|
1,226 |
|
|
(1,948 |
) |
Conference Call and WebcastLRFC
will discuss these results in a conference call on Wednesday,
November 9, 2022 at 10:00 am ET.
To access the call, please dial (646) 307-1963
approximately 10 minutes prior to the start of the conference call
and use the conference ID 2780266.
A live audio webcast of the conference call can
be accessed via the Internet, on a listen-only basis on the
Company’s website, loganridgefinance.com, in the Investor Relations
section, under Events and Presentations. The webcast can also be
accessed by clicking the following link: Logan Ridge Third 2022
Conference Call. 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 loganridgefinance.com.
About Mount Logan Capital Inc.
Mount Logan Capital Inc. is an alternative asset management company
that is focused on public and private debt securities in the North
American market. The Company seeks to source and actively manage
loans and other debt-like securities with credit-oriented
characteristics. The Company 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 with over $40 billion of assets under management 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. Since
inception, BC Partners has completed 117 private equity investments
in companies with a total enterprise value of €149 billion and is
currently investing its eleventh private equity fund.
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, periodic
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, 23rd FloorNew
York, NY 10022
Jason Roos Chief Financial Officer
Jason.Roos@bcpartners.com (212) 891-5046
The Equity Group Inc.Lena Catilcati@equityny.com (212)
836-9611
Logan Ridge Finance
CorporationConsolidated Statements of Assets and
Liabilities (in thousands, except share and per
share data)
|
|
As of September 30, |
|
|
As of December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
(unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
Investments at fair
value: |
|
|
|
|
|
|
Non-control/non-affiliate investments (amortized cost of $172,131
and $131,829, respectively) |
|
$ |
166,404 |
|
|
$ |
129,991 |
|
Affiliate investments (amortized cost of $30,612 and $49,803,
respectively) |
|
|
26,716 |
|
|
|
61,359 |
|
Control investments (amortized cost of $0 and $8,850,
respectively) |
|
|
— |
|
|
|
6,839 |
|
Total investments at fair value (amortized cost of $202,743 and
$190,482, respectively) |
|
|
193,120 |
|
|
|
198,189 |
|
Cash and cash equivalents |
|
|
11,263 |
|
|
|
39,056 |
|
Interest and dividend
receivable |
|
|
1,162 |
|
|
|
929 |
|
Prepaid expenses |
|
|
2,908 |
|
|
|
3,358 |
|
Receivable for unsettled
trades |
|
|
— |
|
|
|
685 |
|
Other assets |
|
|
30 |
|
|
|
— |
|
Total assets |
|
$ |
208,483 |
|
|
$ |
242,217 |
|
LIABILITIES |
|
|
|
|
|
|
2022 Notes (net of deferred
financing costs of zero and $46, respectively) |
|
$ |
— |
|
|
$ |
22,787 |
|
2022 Convertible Notes (net of
deferred financing costs of zero and $167, respectively) |
|
|
— |
|
|
|
51,921 |
|
2026 Notes (net of deferred
financing costs and original issue discount of $1,509 and $1,552,
respectively) |
|
|
48,491 |
|
|
|
48,448 |
|
2032 Convertible Notes (net of
deferred financing costs and original issue discount of $1,146 and
zero, respectively) |
|
|
13,854 |
|
|
|
— |
|
KeyBank Credit Facility (net
of deferred financing costs of $1,391 and $353, respectively) |
|
|
44,385 |
|
|
|
(353 |
) |
Management and incentive fees
payable |
|
|
927 |
|
|
|
1,065 |
|
Interest and financing fees
payable |
|
|
1,289 |
|
|
|
911 |
|
Payable for unsettled
trades |
|
|
381 |
|
|
|
9,265 |
|
Accounts payable and accrued
expenses |
|
|
980 |
|
|
|
1,144 |
|
Total liabilities |
|
$ |
110,307 |
|
|
$ |
135,188 |
|
Commitments and
contingencies |
|
|
|
|
|
|
NET ASSETS |
|
|
|
|
|
|
Common stock, par value $0.01,
100,000,000 common shares authorized, 2,711,068 and 2,711,068
common shares issued and outstanding, respectively |
|
$ |
27 |
|
|
$ |
27 |
|
Additional paid in
capital |
|
|
188,846 |
|
|
|
188,846 |
|
Total distributable loss |
|
|
(90,697 |
) |
|
|
(81,844 |
) |
Total net assets |
|
$ |
98,176 |
|
|
$ |
107,029 |
|
Total liabilities and net
assets |
|
$ |
208,483 |
|
|
$ |
242,217 |
|
Net asset value per share |
|
$ |
36.21 |
|
|
$ |
39.48 |
|
Logan Ridge Finance
CorporationConsolidated Statements of
Operations (in thousands, except share and per
share data) (unaudited)
|
|
For the Three Months Ended September 30, |
|
|
For the Nine Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
INVESTMENT INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
Non-control/non-affiliate investments |
|
$ |
3,162 |
|
|
$ |
2,079 |
|
|
$ |
8,817 |
|
|
$ |
8,177 |
|
Affiliate investments |
|
|
176 |
|
|
|
1,072 |
|
|
|
521 |
|
|
|
3,499 |
|
Control investments |
|
|
35 |
|
|
|
97 |
|
|
|
228 |
|
|
|
293 |
|
Total interest and fee income |
|
|
3,373 |
|
|
|
3,248 |
|
|
|
9,566 |
|
|
|
11,969 |
|
Payment-in-kind interest and
dividend income: |
|
|
|
|
|
|
|
|
|
|
|
|
Non-control/non-affiliate investments |
|
|
250 |
|
|
|
— |
|
|
|
597 |
|
|
|
95 |
|
Affiliate investments |
|
|
47 |
|
|
|
100 |
|
|
|
140 |
|
|
|
298 |
|
Total payment-in-kind interest and dividend income |
|
|
297 |
|
|
|
100 |
|
|
|
737 |
|
|
|
393 |
|
Dividend income: |
|
|
|
|
|
|
|
|
|
|
|
|
Non-control/non-affiliate investments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
560 |
|
Affiliate investments |
|
|
— |
|
|
|
24 |
|
|
|
— |
|
|
|
179 |
|
Total dividend income |
|
|
— |
|
|
|
24 |
|
|
|
— |
|
|
|
739 |
|
Other income: |
|
|
|
|
|
|
|
|
|
|
|
|
Non-control/non-affiliate investments |
|
|
78 |
|
|
|
— |
|
|
|
86 |
|
|
|
174 |
|
Affiliate investments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
67 |
|
Total other income |
|
|
78 |
|
|
|
— |
|
|
|
86 |
|
|
|
241 |
|
Total investment income |
|
|
3,748 |
|
|
|
3,372 |
|
|
|
10,389 |
|
|
|
13,342 |
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
Interest and financing
expenses |
|
|
1,558 |
|
|
|
2,296 |
|
|
|
5,877 |
|
|
|
8,061 |
|
Base management fee |
|
|
927 |
|
|
|
1,111 |
|
|
|
2,928 |
|
|
|
3,781 |
|
Directors expense |
|
|
135 |
|
|
|
103 |
|
|
|
358 |
|
|
|
309 |
|
Administrative service
fees |
|
|
175 |
|
|
|
200 |
|
|
|
426 |
|
|
|
900 |
|
General and administrative
expenses |
|
|
771 |
|
|
|
1,172 |
|
|
|
2,597 |
|
|
|
2,550 |
|
Total expenses |
|
|
3,566 |
|
|
|
4,882 |
|
|
|
12,186 |
|
|
|
15,601 |
|
NET INVESTMENT INCOME (LOSS) |
|
|
182 |
|
|
|
(1,510 |
) |
|
|
(1,797 |
) |
|
|
(2,259 |
) |
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS |
|
|
|
|
|
|
|
|
|
|
|
|
Net realized (loss) gain on
investments: |
|
|
|
|
|
|
|
|
|
|
|
|
Non-control/non-affiliate investments |
|
|
23 |
|
|
|
7,425 |
|
|
|
15,489 |
|
|
|
(1,866 |
) |
Affiliate investments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,215 |
|
Control investments |
|
|
(5,215 |
) |
|
|
— |
|
|
|
(5,215 |
) |
|
|
— |
|
Net realized (loss) gain on investments |
|
|
(5,192 |
) |
|
|
7,425 |
|
|
|
10,274 |
|
|
|
349 |
|
Net change in unrealized
appreciation (depreciation) on investments: |
|
|
|
|
|
|
|
|
|
|
|
|
Non-control/non-affiliate investments |
|
|
652 |
|
|
|
(6,169 |
) |
|
|
(16,993 |
) |
|
|
4,269 |
|
Affiliate investments |
|
|
(3,825 |
) |
|
|
(2,842 |
) |
|
|
(2,348 |
) |
|
|
1,190 |
|
Control investments |
|
|
5,222 |
|
|
|
(390 |
) |
|
|
2,011 |
|
|
|
(1,420 |
) |
Net change in unrealized appreciation (depreciation) on
investments |
|
|
2,049 |
|
|
|
(9,401 |
) |
|
|
(17,330 |
) |
|
|
4,039 |
|
Total net realized and change in unrealized (loss) gain on
investments |
|
|
(3,143 |
) |
|
|
(1,976 |
) |
|
|
(7,056 |
) |
|
|
4,388 |
|
Net realized loss on
extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(815 |
) |
NET (DECREASE) INCREASE IN NET
ASSETS RESULTING FROM OPERATIONS |
|
$ |
(2,961 |
) |
|
$ |
(3,486 |
) |
|
$ |
(8,853 |
) |
|
$ |
1,314 |
|
NET (DECREASE) INCREASE IN NET
ASSETS PER SHARE RESULTING FROM OPERATIONS – BASIC &
DILUTED |
|
$ |
(1.09 |
) |
|
$ |
(1.29 |
) |
|
$ |
(3.27 |
) |
|
$ |
0.48 |
|
WEIGHTED AVERAGE COMMON STOCK
OUTSTANDING – BASIC & DILUTED |
|
|
2,711,068 |
|
|
|
2,711,068 |
|
|
|
2,711,068 |
|
|
|
2,711,068 |
|
DISTRIBUTIONS PAID PER
SHARE |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Grafico Azioni Logan Ridge Finance (NASDAQ:LRFC)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Logan Ridge Finance (NASDAQ:LRFC)
Storico
Da Giu 2023 a Giu 2024