Logan Ridge Finance Corporation Announces Fourth Quarter and Full Year 2022 Financial Results
Reports a Strong Fourth Quarter with Net Investment Income of
Restores Quarterly Distribution; Announces
Board of Directors Authorizes a
Fourth Quarter 2022 Highlights
- Reported positive Net Investment Income (“NII”) of
$0.6 millionor $0.23per share, which marks the Company’s second consecutive quarter of positive NII.
- Net asset value decreased to
$35.04per share as of December 31, 2022from $36.21per share in the prior quarter.
- The Company made approximately
$23.9 millionof investments and had approximately $10.2 millionin repayments and sales of investments, resulting in net deployment of approximately $13.7 millionfor the quarter.
- Successfully exited legacy investment on non-accrual status,
BigMouth, Inc., which resulted in a realized gain of $0.1 millionand the full recovery of the Company’s cost basis.
- Successfully exited legacy equity investments in
LJS Partners, LLCand Burke America Parts Group, LLCfor proceeds of $6.1 millionduring the fourth quarter of 2022, generating a net realized gain of $4.4 million.
Full Year 2022 Milestones
- Achieved positive NII during the third and fourth quarters of 2022.
- Successfully exited legacy non-yielding equity interests in
U.S. BioTek Laboratories, LLC(Class D only), Eastport Holdings, LLC, Vology, Inc., LJS Partners, LLCand Burke America Parts Group, LLC, for aggregate proceeds of $25.3 millionduring the year ended 2022, generating a net realized gain of $15.1 million.
- Reduced the non-yielding equity portfolio to 16.3% and 14.2% of the Company’s total investment cost and fair value, respectively, as of
December 31, 2022, compared to 27.2% and 32.6% of the Company’s total investment cost and fair value, respectively, as of December 31, 2021.
- There have been no new investments on non-accrual status since
Mount Logan Management LLCbecame the Company’s investment adviser on July 1, 2021.
- Refinanced the legacy debt capital structure, materially lowering the Company’s cost of debt capital. As a result, the Company has no near-term maturities, substantially de-risking the balance sheet.
- Increased the yield on our debt portfolio by over 230 basis points, adding momentum to our earnings.
March 6, 2023, the Company’s Board of Directors authorized a new share repurchase program, whereby the Company may repurchase up to an aggregate of $5.0 million of its outstanding common shares in the open market. Unless extended or discontinued by the Company’s Board of Directors, the repurchase program will terminate on March 31, 2024. The repurchase program may be extended, modified or discontinued at any time for any reason without prior notice. The repurchase program does not obligate the Company to acquire any specific number of shares, and all repurchases will be made in accordance with SEC Rule 10b-18 and accomplished through a Rule 10b5-1 plan, which sets certain restrictions on the method, timing, price and volume of share repurchases.
March 6, 2023, the Company’s Board of Directors approved a distribution of $0.18per share payable on March 31, 2023to stockholders of record as of March 20, 2023.
Selected Financial Highlights
- Total investment income for the year ended
December 31, 2022decreased by $1.8 million, to $14.9 million, compared to the prior year, primarily as a result of a smaller portfolio.
- Net investment loss for the year was
$1.2 millionas compared to a loss of $3.6 millionin 2021.
- Total operating expenses for 2022 declined to
$16.1 millionas compared to $20.3 millionin 2021, primarily due to lower interest and financing expenses as result of a smaller portfolio and a lower cost of debt capital.
- Net asset value as of
December 31, 2022was $95.0 million, or $35.04per share, as compared to $107.1 million, or $39.48per share, as of December 31, 2021.
- Cash and cash equivalents as of
December 31, 2022were $6.8 millionas compared to $39.1 millionas of December 31, 2021.
- The investment portfolio as of
December 31, 2022consisted of investments in 59 portfolio companies with a fair value of approximately $203.6 million. This compares to 40 portfolio companies with a fair value of approximately $198.2 millionas of December 31, 2021.
- Deployments remained strong: During the year ended
December 31, 2022, we made approximately $107.7 millionof investments and had approximately $94.0 millionin repayments and sales of investments, resulting in net deployment of approximately $13.7 millionfor the year. During the year ended December 31, 2021, we made approximately $89.4 millionof investments and had approximately $169.6 millionin repayments and sales of investments, resulting in net repayments and sales of approximately $80.2 millionfor the year.
- Debt investment portfolio: As of
December 31, 2022, our debt investment portfolio represented 83.2% of the fair value of our total portfolio, with a weighted average annualized yield of approximately 10.4% (excluding the income from non-accruals and collateralized loan obligations), compared to a debt investment portfolio of approximately 67.4% with a weighted average annualized yield of approximately 8.1% (excluding the income from non-accruals and collateralized loan obligations) at December 31, 2021. As of December 31, 2022, 17.2% of the fair value of our debt investment portfolio was bearing a fixed rate of interest, compared to 22.8% of the fair value of our debt investment portfolio at December 31, 2021.
- Non-Accruals: As of
December 31, 2022, we had debt investments in one portfolio company on non-accrual status with an amortized cost and fair value of $11.9 millionand $9.7 million, respectively, representing 5.4% and 4.8% of the investment portfolio’s amortized cost and fair value, respectively. As of December 31, 2021, we had debt investments in two portfolio companies on non-accrual status with an aggregate amortized cost and fair value of $12.7 millionand $7.6 million, respectively, representing 6.7% and 3.8% of the investment portfolio’s amortized cost and fair value, respectively.
Results of Operations
Operating results for the years ended
|For the Year Ended
|Total investment income||$||14,927||$||16,754|
|Total expenses, net of incentive fee waiver||16,089||20,347|
|Net investment loss||(1,162||)||(3,593||)|
|Net realized gain (loss) on investments||13,769||(7,967||)|
|Net change in unrealized (depreciation) appreciation on investments||(24,631||)||10,667|
|Net realized loss on extinguishment of debt||—||(1,025||)|
|Net decrease in net assets resulting from operations||$||(12,024||)||$||(1,918||)|
The composition of our investment income for the years ended
|For the Year Ended
|Total investment income||$||14,927||$||16,754|
Fair Value of Investments
The composition of our investments as of
|First Lien Debt||$||143,047||64.9||%||$||136,896||67.3||%|
|Second Lien Debt||8,283||3.8||%||6,464||3.2||%|
|Collateralized Loan Obligations||6,185||2.8||%||4,972||2.4||%|
|First Lien Debt||$||103,667||54.4||%||$||98,251||49.6||%|
|Second Lien Debt||30,048||15.8||%||30,190||15.2||%|
|Equity and Warrants||51,717||27.2||%||64,698||32.6||%|
Interest Rate Risk
Based on our
|Basis Point Change||Increase
|Up 300 basis points||$||4,459||$||(1,701||)||$||2,758|
|Up 200 basis points||2,973||(1,134||)||1,839|
|Up 100 basis points||1,486||(567||)||919|
|Down 100 basis points||(1,486||)||567||(919||)|
|Down 200 basis points||(2,951||)||1,134||(1,817||)|
|Down 300 basis points||$||(4,348||)||$||1,701||$||(2,647||)|
Conference Call and Webcast
We will hold a conference call on
To access the conference call, please dial (800) 715-9871 approximately 10 minutes prior to the start of the call. A replay of the conference call will be available from approximately
A live audio webcast of the conference call can be accessed via the Internet, on a listen-only basis on our 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/wxmhir6f. The online archive of the webcast will be available on the Company’s website shortly after the call.
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.
BC Partners Credit was launched in
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
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:
Chief Financial Officer
Consolidated Statements of Assets and Liabilities
(in thousands, except share and per share data)
|Investments at fair value:|
|Non-control/non-affiliate investments (amortized cost of
|Affiliate investments (amortized cost of
|Control investments (amortized cost of zero and
|Total investments at fair value (amortized cost of
|Cash and cash equivalents||6,793||39,056|
|Interest and dividend receivable||1,578||929|
|Receivable for unsettled trades||—||685|
|2022 Notes (net of deferred financing costs of zero and
|2022 Convertible Notes (net of deferred financing costs of zero and
|2026 Notes (net of deferred financing costs and original issue discount of
|2032 Convertible Notes (net of deferred financing costs and original issue discount of
|KeyBank Credit Facility (net of deferred financing costs of
|Management and incentive fees payable||933||1,065|
|Interest and financing fees payable||973||911|
|Payable for unsettled trades||—||9,265|
|Accounts payable and accrued expenses||722||1,144|
|Commitments and contingencies
|Common stock, par value
|Additional paid in capital||191,038||188,846|
|Total distributable loss||(96,060||)||(81,844||)|
|Total net assets||$||95,005||$||107,029|
|Total liabilities and net assets||$||214,710||$||242,217|
|Net asset value per share||$||35.04||$||39.48|
Consolidated Statements of Operations
(in thousands, except share and per share data)
|For the Years Ended
|Total interest and fee income||13,666||14,825||23,719|
|Payment-in-kind interest and dividend income:|
|Total payment-in-kind interest and dividend income||1,106||456||1,923|
|Total dividend income||14||906||25|
|Total other income||141||567||779|
|Total investment income||14,927||16,754||26,446|
|Interest and financing expenses||7,815||10,569||15,144|
|Base management fee||3,861||4,846||6,428|
|Administrative service fees||620||1,039||1,400|
|General and administrative expenses||3,300||3,483||3,091|
|NET INVESTMENT (LOSS) INCOME||(1,162||)||(3,593||)||58|
|REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS|
|Net realized gain (loss) on investments:|
|Net realized gain (loss) on investments||13,769||(7,967||)||(24,049||)|
|Net change in unrealized (depreciation) appreciation on investments:|
|Net change in unrealized (depreciation) appreciation on investments||(24,631||)||10,667||(11,611||)|
|Total net realized and change in unrealized (loss) gain on investments||(10,862||)||2,700||(35,660||)|
|Net realized (loss) gain on extinguishment of debt||—||(1,025||)||155|
|WEIGHTED AVERAGE COMMON STOCK OUTSTANDING – BASIC & DILUTED||2,711,068||2,711,068||2,709,169|
|DISTRIBUTIONS PAID PER SHARE||$||—||$||—||$||1.50|
Source: Logan Ridge Finance Corporation