Q1 2024 Logan Ridge Finance Corporation Earnings Call

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Operator: Thank you. Good morning and welcome to the Logan Ridge Finance Corporation's first quarter ended March 31, 2020 earnings conference call. An earnings press release was distributed yesterday, May 8, after the close of the market. A copy of the release, along with a supplemental earnings presentation, is available on the company's website at www.loganridgefinance.com in the investor resources section and should be reviewed in conjunction with the company's Form 10-Q filed with the SEC.

Thank you good morning, and welcome to the Logan, which finance Corporation's first quarter ended March 31, 2024 earnings Conference calls.

Operator: An earnings press release was distributed yesterday may eight after the close of the market.

Operator: A copy of the release along with a supplemental earnings presentation is available on the company's website at Www Dot Logan, which financed dot com in the Investor resources section and should be reviewed in conjunction with the company's Form 10-Q filed with the S. E C.

Operator: As a reminder, this conference call is being recorded for replay purposes. Please note that today's conference call may contain forward-looking statements, which are not guarantees of future performance and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in the company's filings with the SEC.

Operator: As a reminder, this conference call is being recorded for replay purposes.

Operator: Please note that todays conference call may contain forward looking statements, which are not guarantees of future performance of resorts and involve a number of risks and uncertainties.

Operator: Actual results may differ materially from those in the forward looking statements as a result of number of factors, including described in the company's filings with the S. E C.

Operator: Speaking on today's call will be Ted Goldthorpe, Chief Executive Officer, President, and Director of Logan Ridge Finance Corporation; Chief Financial Officer, and Patrick Schafer, Chief Investment Officer. With that, I would now like to turn the call over to Ted Goldthorpe, Chief Executive Officer of Logan Ridge Finance Corporation. Please go ahead, Ted.

Operator: Speaking on today's call will be Todd Goldberg, Chief Executive Officer, President and director of Logan, which Finance Corporation.

Operator: <unk> Sarin, Chief Financial Officer, and Patrick Schafer, our Chief investment officer with that I would now like turn the call over to Ted Goldberg, Chief Executive Officer of Logan, who wish to Finance Corporation. Please go ahead.

Edward Joseph Goldthorpe: Thank you. Good morning, and welcome to our first quarter 2024 earnings call. As mentioned, I am joined today by my Chief Financial Officer, Brandon Satoren, and our Chief Investment Officer, Patrick Schafer. Following my open remarks, Patrick will provide additional details on our investment activity to date, and Brandon will walk through our financials. I will keep my prepared remarks brief today and limited to a few key highlights, which Patrick and Brandon will provide more detail on shortly.

Edward Joseph Goldthorpe: Thank you.

Edward Joseph Goldthorpe: Good morning, and welcome to our first quarter 2024 earnings call.

Edward Joseph Goldthorpe: As mentioned I'm joined today by my CFO, Chief Financial Officer, Brendan So Turin.

Edward Joseph Goldthorpe: Our Chief investment Officer, Patrick Schafer.

Patrick Schafer: Following my opening remarks, Patrick will provide additional details on our investment activity to date and Brandon will walk through our financials.

Edward Joseph Goldthorpe: Yes.

Edward Joseph Goldthorpe: Well I'll keep it well why will keep my prepared remarks.

Edward Joseph Goldthorpe: Brief today and limited to a few key highlights, which Patrick and Brendan provide more detail on shortly I would like to emphasize that during the first quarter of 2024, we continue to build upon record financial results.

Edward Joseph Goldthorpe: I would like to emphasize that during the first quarter of 2024, we continue to build upon the record financial results we generated in 2023. The first quarter results are highlighted by the quarter over quarter increases in net investment income and net asset value of 63% and 1%, respectively. Following the strong earnings we saw in 2023, Logan Ridge is off to a solid start in 2024, ending the first quarter with a net deployment of $8.9 million and a robust pipeline.

Edward Joseph Goldthorpe: Generated in 2023.

Edward Joseph Goldthorpe: The first quarter results are highlighted by the quarter over quarter increases in net investment income and net asset value of 63% and 1% respectively.

Edward Joseph Goldthorpe: Following the strong earnings we saw in 2023, Logan Rage is off to a solid start in 2024 and in the first quarter with net deployment of $8 $9 million and a robust pipeline.

Edward Joseph Goldthorpe: As the company's exposure to the legacy equity portfolio has continued to decline, and its exposure to credits originated by the BC Partners credit platform has increased, the benefit to shareholders has been clear and is being reflected through Logan's strong financial results. Furthermore, as a result of the company's strong financial performance during the quarter, the company declared a second quarter distribution of $0.33 per share, or a 3% increase in the company's quarterly distribution compared to the prior quarter.

Edward Joseph Goldthorpe: As the company's exposure to the legacy equity portfolio has continued to decline and its exposure to credits originated by the BC partners credit platform have increased.

Edward Joseph Goldthorpe: The benefit to shareholders has been clear and has been reflected through Logan's strong financial results.

Edward Joseph Goldthorpe: Furthermore, as a result of the company's strong financial performance during the quarter. The company declared a second quarter distribution of $33 333 per share or 3% increase to the companys quarterly distribution compared to the prior quarter.

Edward Joseph Goldthorpe: This is the company's fifth consecutive quarterly increase and represents an 83% increase from the $0.18 per share distribution we declared in the first quarter of 2023. Finally, during the quarter, the company repurchased 21,867 shares, which was accretive to NAV by approximately $0.08 per share. Looking forward to the rest of 2024, our pipeline remains robust, and we continue to see attractive investment opportunities in the market. During the course of 2023, private equity firms were sitting on record amounts of dry powder while, at the same time, being pushed by LPs to return capital.

Edward Joseph Goldthorpe: This is the company's fifth consecutive quarterly increase and represents an 83% increase from the 18 cents per share distribution, we declared in the first quarter of 2023.

Edward Joseph Goldthorpe: Finally during the quarter the company repurchased 21867 shares which was accretive to NAV by approximately <unk> <unk> per share.

Edward Joseph Goldthorpe: Looking forward to the rest of 2024, our pipeline remains robust and we continue to see attractive investment opportunities in the market.

Edward Joseph Goldthorpe: Over the course of 2023 private equity firms were sitting on record amounts of dry powder. While at the same time are being pushed by Lp's to return capital.

Edward Joseph Goldthorpe: Although expectations for future rate hikes have diminished toward the end of the first quarter and the beginning of the second quarter, we believe the aforementioned fundamentals, combined with positive economic outlook and sentiment, should continue to fuel new deal activity in our private credit space over the course of 2024. We remain focused on increasing shareholder value by leveraging the company's stronger balance sheet, and we believe our platform remains well-equipped to take advantage of current market conditions. Specifically at Logan Ridge and more generally across the BC Partners credit platform, we continue to find attractive opportunities both through our sponsor relationships and our focus on sponsor and non-sponsor backed companies and continue to win transactions based on our ability to custom-tailor a capital solution for the borrower and the borrower's belief that our platform can add value to their business above and beyond just being a capital provider. With that being said, I will turn the call over to Patrick Schafer, our Chief Investment Officer.

Edward Joseph Goldthorpe: Although expectations for future rate hikes have diminished towards the end of the first quarter and the beginning of the second quarter. We believe the affirmation aforementioned fundamentals combined with positive economic outlook and sentiment should continue to fuel new deal activity and our private credit space over the course of 2024.

Patrick Schafer: We remain focused on increasing shareholder value by leveraging the company stronger balance sheets, and we believe our platform remains well equipped to take advantage of current market conditions specifically.

Patrick Schafer: Specifically at Logan Ridge, and more generally across the BC partners credit platform, we continue to find attractive opportunities both through our sponsor relationships and our focus on sponsor and non sponsor backed companies and continue to win transactions based on our ability to custom tailored capital solution for the borrower and the borrowers belief that our platform.

Patrick Schafer: We can add value to their business above and beyond just being a capital provider.

Edward Joseph Goldthorpe: But that being said I will turn the call over to Patrick Schafer, our Chief investment Officer.

Patrick Schafer: Thanks, Ted, and hello everyone. As of March 31st, 2024, the fair value of Logan's portfolio was approximately $200.1 million, with exposure to 62 portfolio companies. This compares to 60 portfolio companies with a fair value of approximately $189.7 million as of the prior quarter, and 59 portfolio companies with a fair value of $203.3 million as of March 31, 2021. During the quarter ending March 31st, 2024, we continue to deploy capital in new and existing portfolio companies.

Patrick Schafer: Thanks, Chad and Hello, everyone as of March 31, 2020 for the fair value of Logan's portfolio was approximately $200 $1 million with exposure to 62 portfolio companies. This compares to 60 portfolio companies with the fair value of approximately $189 $7 million as of the prior quarter and 59.

Patrick Schafer: Portfolio companies with the fair value of $203 3 million as of March 31, 2023.

Patrick Schafer: During the quarter ended March 31, 2024, we continue to deploy capital in new and existing portfolio companies specifically the company made approximately $9 8 million in new and existing investments and had approximately <unk> 9 million in repayments and sales, resulting in net deployment of approximately $8 9 million for the quarter.

Patrick Schafer: Specifically, the company made approximately $9.8 million in new and existing investments and had approximately $0.9 million in repayments and sales, resulting in a net deployment of approximately $8.9 million for the quarter. While we continue to be prudent and disciplined underwriters, we believe that the loans originated in the current environment will prove to be an attractive venture. On portfolio composition, as of March 31st, 2024, 60% of the company's investments at fair value were invested in assets originated by the B.C. Partners Credit Platform.

Patrick Schafer: While we continue to be prudent and disciplined underwriters, we believe that the loans originated in the current environment will prove to be an attractive vintage.

Patrick Schafer: The portfolio composition as of March 31, 2024, 60% of the company's investments at fair value were invested in assets originated by the BC partners credit platform.

Patrick Schafer: As of March 31st, 2024, our debt investment portfolio represented 80.8% of the total portfolio at fair value, with a weighted average annualized yield of approximately 11.4%, excluding income from non-accruals and collateralized loan outs. This compares to a debt portfolio which represented 82.0% of our total portfolio at fair value with a weighted average annualized yield of approximately 11.1% excluding income from non-accruals and collateralized loan obligations as of the prior quarter, and 83.1% with a weighted average annualized yield of approximately 10.7% as of March 31st, 2021. The weighted average annualized yield, excluding income from non-accruals and collateralized loan obligations, increased by 30 basis points and 70 basis points compared to the prior quarter and prior year, respectively.

Patrick Schafer: As of March 31, 2024, our debt investment portfolio represented 88% of the total portfolio at fair value with a weighted average annualized yield of approximately 11, 4% excluding income from non accruals and collateralized loan obligations.

Patrick Schafer: This compares to a debt portfolio, which represented 82.0% of our total portfolio at fair value with a weighted average annualized yield of approximately 11, 1% excluding income from non accruals and collateralized loan obligations as in the prior quarter.

Patrick Schafer: And 83, 1% with a weighted average annualized yield of approximately 10, 7% as of March 31 2023.

Patrick Schafer: The weighted average annualized yield excluding income from non accruals and collateralized loan obligations increased by 30 basis points, and 70 basis points compared to prior year prior quarter and prior year respectively.

Patrick Schafer: As of March 31st, 2024, 88.5% of our debt investment portfolio at fair value was bearing interest at a floating rate, compared to 86.4% as of December 31st, 2023 and 83.4% as of March 31st, 2023. As of March 31, 2024, First Lien Debt represented 66.5% and 65.2% of our total portfolio on a cost and fair value basis, respectively. This compares to first lien debt representing 65.4% of our total portfolio on both a cost and fair value basis as of December 31st, 2023.

Patrick Schafer: As of March 31, 2024, 88, 5% of our debt investment portfolio at fair value was bearing interest at a floating rate compared to 86, 4% as of December 31, 2023, and 83, 4% as of March 31 2023.

Patrick Schafer: As of March 31, 2024, first lien debt represented 66, 5% and 65, 2% of our total portfolio on a cost and fair value basis, respectively.

Patrick Schafer: This compares to first lien debt, representing 65, 4% of our total portfolio on both the cost and fair value basis as of December 31, 2023.

Patrick Schafer: 65.4% and 67.7% of our total portfolio on a cost and fair value basis, respectively, as of March 31st, 2023. The non-yielding equity portfolio represented 15.2% and 18.2% of our portfolio on a cost and fair value basis, respectively, as of March 31st, 2021. This compares to 15.5% and 17.0% of the portfolio on a cost and fair value basis as of December 31st, 2020. Moving on to non-accrual status, as of March 31st, 2023, the company had three portfolio companies on non-accrual status with an aggregate amortized cost and fair value of $17.2 million and $10.6 million, respectively, or 8.3% and 5.3% of the investment portfolio at cost and fair value respectively.

Patrick Schafer: And 65, 4% and 67, 7% of our total portfolio on a cost and fair value basis, respectively. As of March 31 2023.

Patrick Schafer: The non yielding equity portfolio represented 15, 2% and 18, 2% of our portfolio on a cost and fair value basis, respectively. As of March 31, 2020 for.

Patrick Schafer: This compares to 15, 5% and 17.0% of the portfolio on a cost and fair value basis as of December 31, 2023.

Patrick Schafer: Moving on to non accrual status as of March 31, 2023, the company had three portfolio companies on nonaccrual status with an aggregate amortized cost and fair value of $17 2 million and $10 6 million, respectively were eight 3% and five 3% of the investment portfolio at cost.

Patrick Schafer: And fair value respectively.

Patrick Schafer: This compares to three portfolio companies on non-equal status as of the prior quarter, with a cost and fair value of $17.2 million and $12.8 million, respectively, or 8.7 percent and 6.9 percent of the investment portfolio's cost and fair value, respectively. Now, I'll turn the call over to Brandon.

Patrick Schafer: This compares to three portfolio companies on nonaccrual status as of the prior quarter with a cost and fair value of $17 2 million and $12 8 million, respectively, or <unk>, 7% and six 9% of the companies.

Brandon: The investment portfolio at cost and fair value respectively.

Patrick Schafer: And now I'll turn the call over to Brandon.

Brandon Satoren: Thanks, Patrick. Turning to our financial results for the quarter ended March 31st, 2024. For the quarter ended March 31st, 2024, Logan generated $5 million of investment income, an increase of 0.6 million as compared to 4.4 million. The increase was largely a result of a one-time reversal of $0.6 million of previously accrued income on a portfolio company that was placed on nonaccrual in Q4 of 2023. Total operating expenses for the first quarter increased by approximately $0.2 million to $4.1 million as compared to $3.8 million for the prior quarter. The increase in operating expenses was primarily driven by higher financing costs, as well as higher general and administrative expenses.

Brandon: Thanks, Patrick turning to our financial results for the quarter ended March 31, 2024 for the quarter ended March 31, 2020 for Logan generated $5 million of investment income an increase of 0.6 million as compared to $4 4 million.

Brandon Satoren: In the prior quarter. The increase was largely a result of a one time reversal of 0.6 million of previously accrued income on a portfolio company that was placed on nonaccrual.

Brandon Satoren: In Q4 of 2023.

Brandon Satoren: Total operating expenses for the first quarter increased by approximately 0.2 million to $4 1 million as compared to $3 8 million for the prior quarter.

Brandon Satoren: The increase in operating expenses was primarily driven by higher financing costs as well as higher general and administrative expenses.

Brandon Satoren: Our net investment income for the first quarter was $0.9 million, or $0.35 per share, an increase of $0.3 million from $0.6 million, or $0.22 per share, in the fourth quarter of 2023. As I noted previously, the increase in net investment income was primarily due to reversing $0.6 million, or $0.22 per share, of previously accrued income on a portfolio company that was placed on non-accrual status in the prior quarter. Our net asset value as of March 31st, 2024, was $90.2 million, representing a $1 million increase as compared to the prior quarter net asset value of $89.2 million.

Brandon Satoren: Our net investment income for the first quarter was 0.9 million or <unk> 35 per share an increase of zero point $3 million from zero point $6 million or 22 cents per share in the fourth quarter of 2023.

Brandon Satoren: As I noted previously the increase in net investment income was primarily due to reversing 0.6 million or <unk> 22 per share of previously accrued income on a portfolio company that was placed on nonaccrual status in the prior quarter.

Brandon Satoren: Our net asset value as of March 31, 2024 was $90 2 million, representing a 1 million dollar increase as compared to the prior quarter and net asset value of $89 2 million.

Brandon Satoren: On a per share basis, net asset value is $33.71 per share as of March 31st, 2024, representing a $0.37 increase as compared to $33.34 at the end of 2023. The increase in net asset value quarter over quarter was driven by net realized and change in unrealized gains on the portfolio, as well as Logan Ridge out-earning the quarterly dividend payment by $0.1 million. Finally, as of quarter end, the company had $8.3 million in cash and cash equivalents, as well as $23 million of unused borrowing capacity available for deployment in investments originated by the BC Partners credit platform.

Brandon Satoren: On a per share basis net asset value was $33 71 per share as of March 31, 2024, representing a 37 cent increase as compared to $33 34 at the end of 2023.

Brandon Satoren: The increase in net asset value quarter over quarter was driven by net realized and change in unrealized gains on the portfolio as well as Logan ridge out, earning the quarterly dividend payment by 0.1 million.

Brandon Satoren: Finally as of quarter end, the company had $8 3 million in cash and cash equivalents as well as $23 million of unused borrowing capacity available for deployment and investments originated by the BC partners credit platform.

Edward Joseph Goldthorpe: With that, I will turn the call back over to Ted.

Brandon Satoren: With that I will turn the call back over to Ted.

Ted: Thank you Brandon.

Edward Joseph Goldthorpe: To our shareholders, thank you for your continued support. This concludes our prepared remarks, and I will now turn the call over to the operator for any questions.

Ted: Our shareholders. Thank you for your continued support this.

Ted: This concludes our prepared remarks, and I'll now turn the call over the operator for any questions.

Edward Joseph Goldthorpe: Okay.

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. And if you are called upon to ask your question and are listening via the loud speaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, please press star 1 to join the queue. And your first question comes from the line of Christopher Nolan of Landenburg-Talman. Please go ahead. Hey guys,

Speaker Change: Thank you we will now begin the question and answer session. If you have dialed in and would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue. If you would like to withdraw your question. Please press star one again and if you are called upon to ask your question and listening via loud speaker on your device. Please speak.

Christopher Whitbread Patrick Nolan: Hey guys, I'm Brandon. Um, just to make sure that you mentioned the 22 cent recovery from the previous non-accrual. Was that for this quarter?

Christopher Whitbread Patrick Nolan: Up your handset and ensure that your phone is not on mute when asking your question.

Christopher Whitbread Patrick Nolan: Again, Please press star one to join the queue.

Brandon Satoren: Chris, that was last quarter. We had about 600,000 in receivables that we had to write off through Q4 NII. So that's the reversal this quarter you're seeing flow through earnings.

Christopher Whitbread Patrick Nolan: And your first question comes from the line of Christopher Nolan of London break Perlman. Please go ahead.

Brandon Satoren: So there was a reverse.

Brandon Satoren: Hey, guys umbrella I just to make sure that you mentioned the 22 cent recovery from the previous non accrual was that for this quarter.

Speaker Change: No Chris that was last quarter.

Brandon Satoren: We had about <unk> <unk>.

Brandon Satoren: 600000 in receivables that we had to write off through Q4.

Brandon Satoren: NII.

Brandon Satoren: Okay.

Brandon Satoren: That's the reversal this quarter youre seeing flow through earnings.

Brandon Satoren: So there was a reversal this quarter no I E. Sorry, I think what he means is it. The fact that we did not have a reversal this quarter, but did have reversal last quarter. That's what that's part of why you're seeing the meaningful increase the flip Scott is right. Okay. Thank you and degree you guys are getting a lot of love from.

Brandon Satoren: No, sorry, I think what he meant is the fact that we did not have a reversal this quarter but did have a reversal last quarter. That's part of why you're seeing the meaningful increase. Got it. Okay. Thank you.

Edward Joseph Goldthorpe: Nth degree, you guys are getting a lot of love. What can you say about this? Because, you know, quarter mile cal- fair value, and that counts as 20% of your total. Yeah, Chris, I think what I would say is the company continues to do very, very well. When we took over this portfolio in the first place, this was a market probably close to zero; it was, you know, an events business where they like, you know, put on and organize events for trade shows and things like that. I think they actually, like run part of the I believe they actually run part of the Apple CES conference and such.

Edward Joseph Goldthorpe: Degree equity holdings.

Edward Joseph Goldthorpe: What can you say about this because you know corner my calculations, the fair value and that increased 38% quarter over quarter.

Edward Joseph Goldthorpe: Yeah.

Edward Joseph Goldthorpe: Total equity holdings.

Speaker Change: Yeah, Chris I think what I would say is the company continues to do very very well when we took over this portfolio in the in the in the first place. This was marked at probably close to zero. It was a it is a events business, where they like you know put up an organized.

Edward Joseph Goldthorpe: Vince for trade shows and things like that I think they actually like run part of the I believe they actually run part of the Apple like CES conference and such.

Edward Joseph Goldthorpe: So like a pretty good business that got massively impacted by COVID. They've continued to grow really, really well. They made an acquisition. And I'm saying I'm against public, they made an acquisition was out last quarter. And I started out last summer of last year.

Edward Joseph Goldthorpe: So I got a pretty good business that got massively impacted by Covid, they've continued to grow really really well they made an acquisition and I am sorry, I'm, saying, that's public and they made acquisition.

Chris: It was announced last quarter I'm, sorry, not acquired last summer of last year. So they're just continuing to perform very well there is at least one other BDC. That's also in it with us and you can see pretty consistent.

Edward Joseph Goldthorpe: So they're just continuing to perform very well. There is at least one other BDC that's also in it with us, and you can see a pretty consistent growth trajectory with kind of how that firm looks at this position as well as us. Okay.

Edward Joseph Goldthorpe: Our growth trajectory, but you know with kind of how that how that firm looks at disposition as well as us.

Christopher Whitbread Patrick Nolan: Okay, and then I guess the final question is, where are we thinking about leverage going forward?

Speaker Change: Okay, and then I guess the final question is where are we thinking about leverage going forward.

Edward Joseph Goldthorpe: Yeah, so what I'd say is, similar to how we think about our other BDC, Portman Ridge, I think, you know, our, like, conceptual, we conceptually feel like a BDC should probably be somewhere in the 1.25 to 1.4 times net leverage, depending on the environment, depending on portfolio composition, etc. I think right now, we're, well, Logan is at 1.3 on a net basis, or on a gross And a little bit less than that on the net, but not significantly less.

Speaker Change: Yeah, So what I'd say is I think <unk>.

Edward Joseph Goldthorpe: Similar to how we think about our other BDC Portman Ridge I think.

Edward Joseph Goldthorpe: Our wide conceptual we conceptually feel like BDC, you should probably be somewhere in the one to five to one four times net leverage depending on the environment, depending on portfolio composition et cetera, I think right now we're well Logan is at 1.3.

Edward Joseph Goldthorpe: On a net basis or on a gross basis sorry.

Edward Joseph Goldthorpe: And in a little bit a little bit less than that on that not not significantly less.

Edward Joseph Goldthorpe: So we're kind of at the low end of our range, obviously, as you alluded to, but we have, you know, one or two very large equity positions. So there is a little bit of variability, a little bit more variability in our NAV than perhaps others. I would say to the extent that, you know, one or two of our large equity positions were to be realized and monetized in cash, we would probably feel a little bit more comfortable bringing leverage up from there.

Edward Joseph Goldthorpe: So we're kind of at the low end of our range. Obviously as you you alluded to it but we have you know one or two very large equity positions. So there is a little bit of vary a little bit more variability in our in our now than perhaps others I would say to the extent that you know one or two of our large equity.

Edward Joseph Goldthorpe: Physicians were to be realized in and monetize it in cash we would probably feel a little bit more comfortable bringing bringing leverage up from there.

Edward Joseph Goldthorpe: But kind of where, again, given sort of that portfolio composition, we would probably sort of look to be on the lower end of our sort of guidance until, you know, until those kinds of get realized.

Edward Joseph Goldthorpe: But kind of where again given sort of that portfolio composition, we would probably sort of look to be on the lower end of our of our sort of guidance. You know until you know until those kind of get realized.

Speaker Change: Got it okay. Thank you.

Operator: Your next question comes from the line of Stephen Martin of LATER. Please go ahead.

Edward Joseph Goldthorpe: Your next question comes from the line of Steven Martin with Slater. Please go ahead, Hello again guys.

Steven L. Martin: Hello again, guys. Hi Steve, hey, following you know uh Portman, can you talk a little bit more about the deployments in the first quarter? In Portman, there was only one new borrower. What does that look like in Logan Ridge? And obviously, can you talk a little bit more about the deployments you expect in the second?

Edward Joseph Goldthorpe: Yeah, I think for Logan, there were two new borrowers. And there was, again, this is a little bit more of the nuance, a portfolio company we made across the platform that was a little bit lower on the yield spectrum. So we didn't think it quite made sense for Portman from a yield perspective or an ROE perspective. But for Logan, it fit very nicely within the leverage facility. So on an ROE basis, it was significantly more attractive for Logan than it would have been for Portman.

Steven L. Martin: Hi, Steve.

Steven L. Martin: Yes.

Edward Joseph Goldthorpe: Following.

Edward Joseph Goldthorpe: Portman.

Speaker Change: Can you talk a little bit more about the deployments in the first quarter.

Edward Joseph Goldthorpe: Importantly, there was only one new.

Edward Joseph Goldthorpe:

Edward Joseph Goldthorpe: Borrower, where what what does that look like in Logan Ridge.

Edward Joseph Goldthorpe: And obviously can you talk a little bit more about the deployments you expect in the second quarter.

Edward Joseph Goldthorpe: Yeah, I think for Portman or sorry, I think for Logan there were two new borrowers.

Edward Joseph Goldthorpe:

Edward Joseph Goldthorpe: And there was again this is a little bit more of the nuance, but there was one particular.

Edward Joseph Goldthorpe: Our portfolio company, our investment we've made across the platform or is a little bit lower on the yield spectrum. So we didn't think it quite made sense for portman from a yield perspective, or an ROE perspective, but for Logan it fit very nicely within the leverage facility. So on an ROE basis, it was significantly more attractive for Logan.

Edward Joseph Goldthorpe: And then it would have been for Portman. So there is again, it's another position that's across our platform, but it made a little bit more sense for Logan than it did for portman, but other than that again I think the trends are generally fairly similar across the two on the margin where we were obviously more of a net deploy your in Logan than in <unk>.

Edward Joseph Goldthorpe: So again, it's another position that's across our platform, but it made a little bit more sense for Logan than it did for Portman. But other than that, I think the trends are generally fairly similar across the two on the margin, where we were obviously more of a net deployer in Logan than in Portman just because it was on the slightly lower end of the leverage spectrum. But I would think that kind of what we talked about earlier is the same, which is, I think, over the course of the year.

Edward Joseph Goldthorpe: And then just because it was a little bit lower end of the leverage spectrum, but I would think you know kind of what we talked about Steve earlier, you know is the same which is I think over the course of the year.

Edward Joseph Goldthorpe: We would expect Logan, again, on the whole, to be a net deployer of capital. Again, some of it depends on whether we have some realizations, hopefully, and particularly in our equity portfolio. Again, kind of the timing of if we did happen to receive $15 million or 14 and change million from nth degree, which is kind of where it's marked, just as a simple example, it might take a little bit of time for us to rotate that cash into loans, and if that happens at quarter end, etc., you might see some net repayment. But overall, again, where we sit at the end of the year, we would probably expect to be a net deployer of capital in Logan Ridge.

Edward Joseph Goldthorpe: We would expect Logan again on the whole to be in that deploy our of capital again some of it depends on if we have some realizations hopefully and in and particularly in our in our equity portfolio, Yeah, Yeah, and kind of the timing of it if we did happen to receive $15 million or 14 changed.

Edward Joseph Goldthorpe: From a degree which is kind of where it's mark just as a simple example might take all the time for us to rotate that cash into into loans and if that happens over quarter end et cetera, you might see some some net repayment, but you know over a you know again, where we sit at the end of the year, we would expect to probably be a net deploy our capital.

Edward Joseph Goldthorpe: And in Logan rich.

Edward Joseph Goldthorpe: And what are your prospects for the second quarter?

Edward Joseph Goldthorpe: And your prospects for the second quarter.

Edward Joseph Goldthorpe: In terms of deployment, again, similar, which is, I think we are in a pretty good spot, have a good pipeline, depending on the timing of such things, again, I would think that Logan is, on the whole, probably a net deployer for the second quarter. But again, it would probably not be as large of a net deployer as it was in Q1, just because, again, we're at about, you know, a little under 1.3 times gross leverage, so we're kind of in a decent spot from a leverage standpoint.

Edward Joseph Goldthorpe: In terms of deployment again, similar which is I think we are in a pretty good spot have a good pipeline depending on timing of such again I would think that Logan is on the whole probably in that deploy our AR for the second quarter, but again, it's I don't think it would probably not be as large of a net deploy or is it.

Edward Joseph Goldthorpe: It was in Q1, just because again, we're at about you know.

Edward Joseph Goldthorpe: A little under 1.3 times gross leverage so we're kind of in a decent spot from a leverage perspective.

Edward Joseph Goldthorpe: Okay, and you made the comment, I think, that Rydell came right at the end of the quarter. Correct. So we didn't really see the impact of RIDL on investment income.

Edward Joseph Goldthorpe: Okay. You made the comment I think that rival was came right at the end of the quarter.

Edward Joseph Goldthorpe: Correct.

Edward Joseph Goldthorpe: We didn't really see the impact of right on the.

Edward Joseph Goldthorpe: Investment income not at all.

Edward Joseph Goldthorpe: Not at all. Zero, zero, zero dollars.

Edward Joseph Goldthorpe: Zero zero zero dollars of impact on net investment income for the quarter.

Edward Joseph Goldthorpe: Steve, that's the open trade payable.

Edward Joseph Goldthorpe: That's the open trade payable on the balance sheet.

Edward Joseph Goldthorpe: $4 million and traded and closed on.

Edward Joseph Goldthorpe: It traded and closed on like a good Friday and settled on like Monday, so it kind of went over quarter end.

Edward Joseph Goldthorpe: Good Friday in and settled on like Monday, So it kind of went over quarter end.

Edward Joseph Goldthorpe: And the rest of the deployments, was that made sort of throughout the quarter, or did we not see, you know, when you get a full quarter of, in Q2, when you get a full quarter of Q1's deployments, will it be a material increase?

Edward Joseph Goldthorpe: And the rest of the deployment was that may sort of throughout the quarter or did we not see.

Edward Joseph Goldthorpe: When you get a full quarter of <unk>.

Edward Joseph Goldthorpe: Q2, when you get a full quarter of Q1's deployments will it be a material increase.

Edward Joseph Goldthorpe: I think it will certainly be an increase because they were not done at the beginning of the quarter. They certainly weren't done as far towards the end as Riddell, so you would see something like a 100% pickup from Riddell. But there definitely, again, should be tailwinds from the net deployment in Q2 versus Q1. And again, off the top of my head, I think that the other one that I was referencing may close sometime in March. But again, you will definitely see a pickup from our net deployments heading into Q2.

Speaker Change: I think.

Edward Joseph Goldthorpe: It will certainly be an increase they were not done at the beginning of the quarter. They certainly werent Don as far towards the end as rudelle. So you would see like a 100% you know pick up from from Rudelle, but they're definitely again should be tailwind from the net deployment in Q2 versus Q1.

Edward Joseph Goldthorpe: And again off the top of my head I think I think that's the other one that I was referencing closed sometime in March but again, you will you will definitely see a pickup.

Edward Joseph Goldthorpe: From our net deployments.

Edward Joseph Goldthorpe: Heading into Q2.

Edward Joseph Goldthorpe: Okay, and would you care to further your comments on possible exits of equity from the equity portfolio?

Edward Joseph Goldthorpe: Okay.

Speaker Change: Would you care to further your comments on possible exits of equity of the equity portfolio.

Edward Joseph Goldthorpe: I think the comment I would make is, similar to the market as a whole, M&A is starting to come back in the private credit space, but generally speaking, in sort of the private equity space as well. It's been a really tough 12 or 18 months to try and sell a business. And so I think just from a macro perspective, we have a lot better chances of exiting an equity position or two this year relative to last year, or probably even in sort of the back half of 2022. But unless something had already been in a process, nothing really got done in the back half of 2022 either.

Speaker Change: I think the comment I would make is <unk>.

Edward Joseph Goldthorpe: Similar to the market as a whole.

Edward Joseph Goldthorpe: M&A is starting to come back in the private and the private credit space, but generally speaking in sort of the private equity space as well.

Edward Joseph Goldthorpe: It was a really tough it's been a really tough 12 or 18 months to try and sell a business.

Edward Joseph Goldthorpe: And so I think just from a macro perspective, we have a lot better chances of you know exiting an equity position or two this year relative to last year or probably even in sort of the back half of 2022, unless something had already been in a process nothing really got done in the back half of 2022, either so I would say.

Edward Joseph Goldthorpe: They were you know hopeful and optimistic but but from a macro perspective, we certainly have have tailwind to be able to to exit some of these as opposed to all of last year. There were certainly meaningful headwinds to exiting equity positions, we expect to make a lot of progress on that front over the course of the year.

Edward Joseph Goldthorpe: So I'd say we're hopeful and optimistic, but from a macro perspective, we certainly have tailwinds to be able to exit some of these, as opposed to all of last year; there were certainly meaningful headwinds to exiting equity.

Edward Joseph Goldthorpe: We expect to make a lot of progress on that front over the course of the year.

Steven L. Martin: Gotcha. Um, and the non-accruals. By the way, you made the comment in your prepared remarks about non-accruals about there being three non-accruals. The schedule says four. Is the schedule wrong, or did you just misspoke? No, it's alright.

Edward Joseph Goldthorpe: Gotcha.

Edward Joseph Goldthorpe:

Steven L. Martin: And.

Edward Joseph Goldthorpe: Three borrowers are non-accrual. One of them happens to have two securities. It's the same set, quarter over quarter. Okay, because, oh I see, because on the schedule it says non-accrual investments, not borrowers. Correct. Gotcha. Apologies for the confusion there. Nope, not a problem, not a problem.

Steven L. Martin: The non accruals.

Steven L. Martin: By the way you made the comment in your <unk>.

Edward Joseph Goldthorpe: Prepared remarks about non accruals about there being three non accruals the schedule says for.

Edward Joseph Goldthorpe: Is the schedule wrong or did you just misspeak.

Edward Joseph Goldthorpe: Three borrowers on non accrual one of them happens to have two securities.

Edward Joseph Goldthorpe: Gotcha same it's the same it's the same set of quarter over quarter.

Edward Joseph Goldthorpe: Okay, because I see because in the <unk>.

Edward Joseph Goldthorpe: The schedule, which is non accrual investments not borrowers correct.

Edward Joseph Goldthorpe: Got you I apologize for the confusion there.

Speaker Change: Not a problem not a problem.

Edward Joseph Goldthorpe: So it was a further markdown of.

Edward Joseph Goldthorpe: So it was a further markdown of an exit. So at the end of Q3, it was 10.6 million at fair value, then it jumped up to 12.8. Then it went down to 10.6. Is that just coincidence that it's the same number?

Edward Joseph Goldthorpe: So at the end of Q3, it was $10 6 million at fair value then it jumped up to $12. Eight then it went down to 10 six is that just coincidence that it's the same number.

Edward Joseph Goldthorpe: Yes, it is. From Q3 to Q4, we added one which was the reason for the increase there, and this quarter, one of them was marked down, and the numbers are pure coincidence.

Speaker Change: Yes. It is.

Edward Joseph Goldthorpe: From Q3 to Q4, we added one which was there which was the reason for the increase there and this quarter one of them was marked down and it's a pure could the numbers are pure coincidence.

Edward Joseph Goldthorpe: gotcha uh... Any prospect of cleaning some of those off? Are they in a work out? Is there a shot that the borrower will restructure it?

Edward Joseph Goldthorpe: Gotcha.

Edward Joseph Goldthorpe: Or any prospective cleaning some of those off are they in workout.

Edward Joseph Goldthorpe: Is there a shot that the borrower world restructure it.

Edward Joseph Goldthorpe: They're all in various stages, you know, obviously all in very different stages since they're on non-accrual and in some sort of restructuring. I would say for the only one that really moves the needle, we probably still have a lot of time to kind of work through that. So I, you know, there are three names; there are two that are on the smaller end, and one is fairly large, which is the historical Sequoia position, and I'd say that one still has a lot longer to work through, and again, the other ones, we obviously continue to try to work out and work through.

Edward Joseph Goldthorpe: They're all in various CLO.

Edward Joseph Goldthorpe: And in various stages since they are on non accrual and in sort of restructuring I would say.

Edward Joseph Goldthorpe: For the only one that really moves the needle.

Edward Joseph Goldthorpe: We probably still have a lot of a lot of time to kind of working through that.

Edward Joseph Goldthorpe: There is of the three names there's two that are on the smaller end and one is fairly large which is the historical.

Edward Joseph Goldthorpe: Sequoia position I would say that one still has as you know a lot longer to work through and again the other ones. We obviously continue to try to to work out and work through.

Edward Joseph Goldthorpe: I wouldn't say we're, you know, necessarily any closer than we were last quarter, and we're also not farther away. We're hopeful for all of them to try and move them into accrual status eventually.

Edward Joseph Goldthorpe: I wouldn't say, we're necessarily any closer than we were last quarter and were also not farther away.

Edward Joseph Goldthorpe: We know worldwide all of them to try and move them into accrual status eventually.

Steven L. Martin: But again, for the one that moves the needle, I would not say we're, you know, closer. Gotcha. All right.

Edward Joseph Goldthorpe: But again for the one that moves the needle I would not say, where we're closer to.

Steven L. Martin: Gotcha. All right, thanks a lot.

Speaker Change: Gotcha, alright, thanks, a lot.

Speaker Change: Thanks, Steve Thank you Steve.

Operator: There are no further questions at this time. I will now turn the conference back over to Ted Goldthorpe for closing remarks.

Steven L. Martin: There are no further questions at this time I will now turn the conference back over to Ted <unk> for closing remarks.

Edward Joseph Goldthorpe: Great well. Thank you everyone for joining us today, and we look forward to speaking to you again in August when we announce our second quarter results. Thank you very much.

Edward Joseph Goldthorpe: Well, thank you everyone for joining us today, and we look forward to speaking to you again in August when we announce our second quarter results. Thank you very much. Ladies and gentlemen, that concludes today's call. Thank you all for joining us.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining us. You may now disconnect.

Edward Joseph Goldthorpe: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.

unknown: [inaudible]

unknown: Okay.

unknown: [music].