Q1 2025 Logan Ridge Finance Corp Earnings Call

Good morning, and welcome to Logan reach Finance Corporation's first quarter ended March 31, 225 earnings conference call.

An earnings press release was distributed yesterday may eight 2025 after the close of the market.

A copy of the release along with a supplemental earnings presentation is available on the company's website.

I believe that would adopt Logan reach finance dot com in the Investor resources section.

It'd be repeating that Jonathan will be the company's Form 10-Q filed with the S E T.

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

Also note that todays conference call may contain forward looking statements, which are not guarantees of future performance or results and involve a number of risks and uncertainties.

Actual results may differ materially from dosing the forward looking statements, how sorry, I saw the top numbers of factors.

And those described in the company's filings with the S E C.

Dead Goldfarb: Speaking on today's call will be dead Goldfarb, Chief Executive Officer, President and director of Logan reach Finance Corporation.

Speaker Change: Brian Thats Authority, Chief Financial Officer, and Patrick Schaefer, Chief Investment Officer.

Speaker Change: With that I would now like to turn the call over to Ted Goldberg, Chief Executive Officer of Logan reach Finance Corporation. Please go ahead.

Speaker Change: Good morning, welcome to our first quarter 2025 earnings call.

Speaker Change: Mentioned I'm joined today by our Chief Financial Officer, Brendan <unk>, and our Chief investment Officer, Patrick Schafer.

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

Speaker Change: Following record results in 2024, both of which continued to make significant strides in strengthening in its portfolio.

Speaker Change: A large write down on the company's legacy term loan.

Speaker Change: Health care.

Investment, GA Communications.

Speaker Change: This exit stands as another important achievement in our long-term strategy to rotate out of the legacy equity portfolio, which is now being reduced to just 10.8% of the our portfolio fair value down from 13.8% as of the prior quarter in 18.2% in the first quarter of 2024.

Speaker Change: Looking forward, with a continued monetization, the legacy equity portfolio, we believe the company is both positioned to continue to grow earnings and increase long-term shareholder value as we navigate this dynamic market shape.

by Renewed Uncertainty, increased market volatility, and shifting geopolitical dynamics.

Speaker Change: Finally, we may remain very excited about the opportunities that the combination with Felton Ridge presents. The transaction offers the potential for increased scale, improved liquidity, and enhanced operational efficiencies. All of this will strengthen our ability to deliver greater value to shareholders.

Speaker Change: The combination of these companies represents a significant milestone, and is a culmination of years of work repositioning the portfolio that DC Partners credit has executed since taking over as the external manager in 2021.

Speaker Change: We encourage all shareholders to attend the meeting and vote for the proposed merger as recommended by the board directors of both companies. We are excited about the road ahead and look forward to sharing more updates soon. With that, I will turn the call over to Patrick Schafer that discussed our portfolio and the last lecture.

Patrick Schafer: Thanks Ted, hello everyone. That's from March 31st, 2025. The Federal value of Logan's portfolio was approximately 169.6 million dollars with exposure of 59 portfolio companies.

Patrick Schafer: This compares to 59 portfolio companies with their value of approximately 172.3 million as of the private world.

Patrick Schafer: As I mentioned, during the quarter ended March 31st, 2005, we continued to be selective in our investment strategy. We deployed approximately $15.1 million into new and existing investments and had approximately $12.5 million in repayments and sales, resulting in net deployment of approximately $2.7 million

Patrick Schafer: on portfolio composition as of March 31st, 2025, 71.8% of the company's investment portfolio at a value was invested in assets originated by the BC Partners Credit Platform.

Patrick Schafer: Also, as of March 31st, 2025, our debt invest in portfolio represented 86.6% of the total portfolio at fair value, the weighted average annualized yield of approximately 10.7% excluding income from non-accruals and collateralized loan obligations.

Patrick Schafer: In 90.7% of our debt investment portfolio of fair value was bearing interest at a floating rates.

Additionally, end of March 31st, 2025.

Patrick Schafer: First lean debt represented 66.7% and 67.6% of our total portfolio on cost and fair value basis respectively. While the equity portfolio was reduced to 12% from 10.8% of the portfolio on a cost and fair value basis respectively.

Patrick Schafer: The reduction in the equity portfolio on a fair value base is during the first quarter of 2025, as compared to the previous quarter, with due to the exit of our second largest non-yielding equity position in GA communications, Martin, another milestone for a long-term strategy to rotate out on the legacy equity portfolio.

on to non-accrual status as of March 31st, 2025.

Patrick Schafer: The company has four debt investments across three portfolio companies, a non-alcohol status, with an aggregate and amortized cost and fair value of 17.2 million and 3.7 million respectively, were 8.7% and 2.2% of the investment portfolio at cost and fair value respectively.

Patrick Schafer: This is the remaining consistent with the fourth quarter of 2024, with the same four debt investments in three portfolio companies with the cost.

Brandon: in fair value of 17.2 million and 7.9 million respectively, or 9.0% and 4.6% of the investment of the investment portfolios cost and fair value respectively, and I'll throw the call over to Brandon.

Brandon: Thanks, Patrick. For the quarter-ended March 31, 2025, Logan Ridge generated 4.6 million of investment income, which represents a $0.8 million decrease or $0.29 per share as compared to 5.4 million reported for the quarter-ended December 31, 2024.

Brandon: The decrease in investment income on a per share basis from the prior quarter was primarily driven by one, a decrease of 17 cents per share as a result of lower non-recurring pay-down

Brandon: A decrease of 5 cents per share from lower base rates.

Brandon: A decrease of $0.5 per share as a result of the majority of the current quarters deployment occurring in the second half of the quarter relative to the timing of repayments and sales.

Brandon: and five, a decrease of two cents per share in CLO random.

Brandon: For the quarter ended, March 31st, 2025, Logan Ridge reported 3.7 million of operating expenses, which represents a decrease of 0.2 million or 8 cents per share from the prior quarter.

Brandon: The decrease is primarily due to a decrease in interest in financing expenses in addition to lower-based management fees and administrative expenses compared to the prior quarter.

Brandon: Accordingly, net and investment income for the first quarter of 2025 was 0.9 million or 35 cents per share which represents a decrease of 0.6 million

Brandon: As of March 31st, 2025, our net asset value was 78.8 million representing a decrease of 6.3 million or 7.4% as compared to the prior quarter net asset value of 85.1 million as of December 31st, 2024.

Brandon: On a per share basis, the company's net asset value was $29.66 as of March 31st, 2025, representing a $2.38 per share decrease.

Brandon: or 7.5% as compared to $32.04 per share in the prior quarter.

Brandon: The decrease in that asset value from the prior quarter was largely due to the $4.4 million right down on the company's legacy investment in Sequoia, which has been on non-accrual since we began managing the portfolio in 2021.

Brandon: Finally, as of March 31st, 2025, the company had 5.1 million in cash and cash equivalents as well as 31.5 million of unused borrowing capacity available for deployment in new investments. With that, I will turn the call back over to Ted.

Ted Logan: Thank you, Brandon. For our shareholders, thank you for your continued support. This concludes our prepared remarks, and I'll now turn over the call to the operator for questions.

Ted Logan: We will now begin the question and answer session. If you would like to ask a question, simply press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, press star one again.

Speaker Change: And our first question comes from the line of Christopher Nolan with Leidenburg Talman, Christopher, please go ahead.

Hey guys, um...

Speaker Change: with the pending merger with Portman, assuming it goes through, does that entail a full valuation review of Logan's investments?

Speaker Change: Yeah, similar to any of them, the ideals that we've done that you have to strike a new now for both Portman and Logan within 48 hours of share issuance. So the short answer is yes.

Okay, so the entire portfolio for both companies is basically...

Speaker Change: Re-value. Is that not by an outsider, at-flight organization with the board, or have a, um...

Speaker Change: is generally done consistent with our practices. So for, you know, to extend depending on the timing we'll have third party marks for certain of the names, we'll do all the liquid pricing, we'll do our own internal models. I would think of it as kind of a regular way process for us.

Speaker Change: Okay, the only reason I ask all this is, you know, just because of all the uncertainty in the economy, you know, is this one of these things where the discount rate can be increased more than otherwise, things like that?

Speaker Change: I mean, the short answer is, you know, it's linked to liquid benchmarks usually, which quite frankly have been

Speaker Change: Goldthorpe, you did, right? So credit really isn't wide that much since the last quarter. So we don't think it'll be a huge impact, and it impacts...

Logan, it'll impact Corbin as well.

Okay, that's it from me. That's Chris.

and your next question, come from the line of Steve.

Speaker Change: Steven Martin with Flater Capital. Steven, please go ahead. Alright, thanks a lot. You know, I'll ask the same question here. Can you talk about the non-accruals and what the prospect is for recovering some of that? And, you know, what's...

left in the portfolio that has that kind of risk.

$30 now.

Speaker Change: Yeah, so Steve, I would say like far and away the biggest asset in our course was always Ben Sequoia, so I think from that perspective I don't think we expect.

Speaker Change: sort of meaningful recovery and sort of a turn back on of interest from that one again it's been on the cruel sense even before

Speaker Change: We took over measurements, so I would think it's generally speaking that...

Speaker Change: You know, I would say there's not a lot of incremental upside from the non-improal book, I'm converting onto you up to the girls, respecting the rest of the book.

Speaker Change: I mean, again, as we kind of in the notes, you know, over 70% of the portfolio is originated, and then you, um,

Speaker Change: the 10% of equity portfolio, which is largely sort of legacy, you know, versus you see. So if you think about it, there is maybe 20, a little bit more than 20% of the portfolio that is sort of

Legacy Capital.

Thank you. Thank you.

Decapitala, Names, and Class Majority Months.

is an investment in East Port, which is generally performing.

Pretty well and pre-stable.

Speaker Change: So I would say there's been not a ton of risk on sort of the legacy capital portfolio from an out of rural perspective, but but acknowledge that that you have sort of one there is one large position on the debt side, but that is generally performing well.

Speaker Change: Okay, and you guys have sourced 75-80% of the book now of the debt book.

Speaker Change: You know, are any of you, are any of the BC loans in non accrual and what's the status of the BC loans?

Yeah.

Speaker Change: So, in terms of VC names on non-accrual, so, and again, there are three, it's MMI, which is the legacy names to coin a legacy name, and then Lucky Box, which has been on non-accrual for...

Oh, he's getting them.

Speaker Change: Close to two years now. And that would be a BC name. So CZ Enter is one of you know one of three

and what about in general...

Speaker Change: Obviously you don't have this probably at hand if you looked at the BC sourced book.

Speaker Change: What is the discount to PAR, or how would you characterize the mark on the DC, the BC

Speaker Change: Yeah, I mean, the short answer that I have to get back to you with the specific one. The long answer is if you strip out lucky bucks, which is kind of on the non-accrual,

Speaker Change: I think there's maybe one name that I can think about the top of my head that is marked at something that is less than sort of...

Speaker Change: 90, and that would be data link, which is in the high 80s. And then we do have some liquid names in the book, similar to Portman. So again, I can get back to you, Steve, with the number. I don't have one off the top of my head, though.

Okay, thanks a lot.

Speaker Change: Thank you for watching. Please subscribe to my channel. I upload weekly. Please like and comment.

Speaker Change: That includes our question and answer session. I would like to turn the call over to Ted Goldthorpe for closing remarks.

Ted Goldthorpe: Thanks everyone for joining us today. We'll continue to provide our shareholders with updates about the proposed murders with Portman Ridge as those become available. As always, please reach out to us with any questions which we're happy to discuss. We look forward to speaking to you guys again soon. Thank you.

That concludes the risk on friends call, you may now disconnect.

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