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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Logan Ridge Finance Corporation | NASDAQ:LRFC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.23 | 1.04% | 22.25 | 21.53 | 22.54 | 22.25 | 21.3353 | 22.23 | 9,047 | 21:00:54 |
Fourth Quarter 2023 Highlights
Full Year 2023 Milestones
Subsequent Events
Management CommentaryTed Goldthorpe, Chief Executive Officer and President of LRFC, said, “We are pleased to report our strongest full year of financial performance since Mount Logan Management took over as the Company’s investment advisor in July of 2021. These results are a testament to the work we have done to optimize Logan’s balance sheet, the benefits of higher rates and our prudent deployment in a complex market. Of particular note, I would like to highlight our net investment income growth of 431% compared to the prior year as well as our $0.97 per share of undistributed spillover earnings as of December 31, 2023. This speaks volumes for the earnings power of the Company today, and also illustrates the potential to drive incremental earnings growth in 2024 as we continue to rotate out of the Company’s non-income producing legacy equity exposure and redeploy that capital into credits originated by the BC Partners credit platform.
Further, Logan’s improved financial position has allowed the Board of Directors to approve a dividend of $0.32 per share for the first quarter of 2024, which represents a 7% increase over the prior quarter, and a 78% increase compared to the $0.18 per share distribution declared during the first quarter of 2023 when the Board reintroduced the quarterly distribution.
Looking forward to 2024, in spite of a unique and dynamic market, we are starting to see an increase in private market transactions with attractive terms and pricing. We are optimistic this trend will continue barring any unforeseen economic events. As always, we continue to focus on maximizing the earnings power of the Company to further increase stockholder total returns.”
Selected Financial Information
Results of OperationsOur operating results for the years ended December 31, 2023 and 2022 were as follows (dollars in thousands):
For the Years Ended December 31, | |||||||
2023 | 2022 | ||||||
Total investment income | $ | 20,177 | $ | 14,927 | |||
Total expenses | 16,330 | 16,089 | |||||
Net investment income (loss) | 3,847 | (1,162 | ) | ||||
Net realized (loss) gain on investments | (16,393 | ) | 13,769 | ||||
Net change in unrealized appreciation (depreciation) on investments | 10,064 | (24,631 | ) | ||||
Net decrease in net assets resulting from operations | $ | (2,482 | ) | $ | (12,024 | ) | |
Investment income The composition of our investment income for the years ended December 31, 2023 and 2022 was as follows (dollars in thousands):
For the Years Ended December 31, | |||||||
2023 | 2022 | ||||||
Interest income | $ | 18,366 | $ | 13,666 | |||
Payment-in-kind interest | 1,484 | 1,106 | |||||
Dividend income | 68 | 14 | |||||
Other income | 259 | 141 | |||||
Total investment income | $ | 20,177 | $ | 14,927 | |||
Fair Value of InvestmentsThe composition of our investments as of December 31, 2023 and December 31, 2022 at amortized cost and the fair value of investments was as follows (dollars in thousands):
As of December 31, 2023 | Investments atAmortized Cost | Amortized CostPercentage ofTotal Portfolio | Investments atFair Value | Fair ValuePercentage ofTotal Portfolio | |||||||||||
First Lien Debt | $ | 128,537 | 65.4 | % | $ | 124,007 | 65.4 | % | |||||||
Second Lien Debt | 8,968 | 4.6 | % | 7,918 | 4.2 | % | |||||||||
Subordinated Debt | 26,573 | 13.5 | % | 23,548 | 12.4 | % | |||||||||
Collateralized Loan Obligations | 1,600 | 0.8 | % | 1,600 | 0.8 | % | |||||||||
Joint Venture | 440 | 0.2 | % | 450 | 0.2 | % | |||||||||
Equity | 30,400 | 15.5 | % | 32,135 | 17.0 | % | |||||||||
Total | $ | 196,518 | 100.0 | % | $ | 189,658 | 100.0 | % | |||||||
As of December 31, 2022 | Investments atAmortized Cost | Amortized CostPercentage ofTotal Portfolio | Investments atFair Value | Fair ValuePercentage ofTotal Portfolio | |||||||||||
First Lien Debt | $ | 143,047 | 64.9 | % | $ | 136,896 | 67.3 | % | |||||||
Second Lien Debt | 8,283 | 3.8 | % | 6,464 | 3.2 | % | |||||||||
Subordinated Debt | 26,571 | 12.0 | % | 25,851 | 12.7 | % | |||||||||
Collateralized Loan Obligations | 6,185 | 2.8 | % | 4,972 | 2.4 | % | |||||||||
Joint Venture | 414 | 0.2 | % | 403 | 0.2 | % | |||||||||
Equity | 36,016 | 16.3 | % | 29,006 | 14.2 | % | |||||||||
Total | $ | 220,516 | 100.0 | % | $ | 203,592 | 100.0 | % | |||||||
Interest Rate Risk
Based on our December 31, 2023 consolidated statements 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 (dollars in thousands):
Basis Point Change | Increase(decrease) in interest income | (Increase)decrease ininterest expense | Increase(decrease) in net income | ||||||||
Up 300 basis points | $ | 4,235 | $ | (1,203 | ) | $ | 3,032 | ||||
Up 200 basis points | 2,823 | (802 | ) | 2,021 | |||||||
Up 100 basis points | 1,412 | (401 | ) | 1,011 | |||||||
Down 100 basis points | (1,412 | ) | 401 | (1,011 | ) | ||||||
Down 200 basis points | (2,823 | ) | 802 | (2,021 | ) | ||||||
Down 300 basis points | $ | (4,176 | ) | $ | 1,203 | $ | (2,973 | ) | |||
Conference Call and Webcast
We will hold a conference call on Thursday, March 28, 2024, at 10:00 a.m. Eastern Time to discuss the fourth quarter and full year 2023 financial results. Stockholders, prospective stockholders, and analysts are welcome to listen to the call or attend the webcast.
To access the conference call, please dial (646) 307-1963 approximately 10 minutes prior to the start of the call and use the conference ID 4191001. A replay of this conference call will be available shortly after the live call through April 4, 2024.
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/yw3vn225/. The online archive of the webcast will be available on the Company’s website shortly after the call.
About Logan Ridge Finance CorporationLogan Ridge Finance Corporation (Nasdaq: LRFC) is a business development company that invests primarily in first lien loans and, to a lesser extent, second lien loans and equity securities issued by lower middle-market companies. The Company invests in performing, well-established middle-market businesses that operate across a wide range of industries. It employs fundamental credit analysis, targeting investments in businesses with relatively low levels of cyclicality and operating risk. For more information, visit www.loganridgefinance.com.
About Mount Logan Capital Inc. Mount Logan Capital Inc. (“MLC”) is an alternative asset management company that is focused on public and private debt securities in the North American market. MLC seeks to source and actively manage loans and other debt-like securities with credit-oriented characteristics. MLC actively sources, evaluates, underwrites, manages, monitors, and primarily invests in loans, debt securities, and other credit-oriented instruments that present attractive risk-adjusted returns and present low risk of principal impairment through the credit cycle.
About BC Partners Advisors L.P. and BC Partners CreditBC Partners is a leading international investment firm 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. For more information, please visit www.bcpartners.com.
BC Partners Credit was launched in February 2017 and has pursued a strategy focused on identifying attractive credit opportunities in any market environment and across sectors, leveraging the deal sourcing and infrastructure made available from BC Partners.
Cautionary Statement Regarding Forward-Looking Statements
This communication contains “forward-looking” statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts and are sometimes identified by the words “may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “overestimate,” “underestimate,” “believe,” “could,” “project,” “predict,” “continue,” “target” or other similar words or expressions. Forward-looking statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove to be incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include those risk factors detailed in the Company’s reports filed with the Securities and Exchange Commission (“SEC”), including the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other documents filed with the SEC.
Any forward-looking statements speak only as of the date of this communication. The Company does not undertake any obligation to update any forward-looking statements, whether as a result of new information or developments, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.
For additional information, contact:
Logan Ridge Finance Corporation650 Madison Avenue, 23rd FloorNew York, NY 10022
Jason Roos Chief Financial Officer Jason.Roos@bcpartners.com (212) 891-2880
Lena Cati The Equity Group Inc.lcati@equityny.com (212) 836-9611
Val FerraroThe Equity Group Inc.vferraro@equityny.com (212) 836-9633
Logan Ridge Finance CorporationConsolidated Statements of Assets and Liabilities (in thousands, except share and per share data) | |||||||
As of December 31,2023 | As of December 31,2022 | ||||||
ASSETS | |||||||
Investments at fair value: | |||||||
Non-control/non-affiliate investments (amortized cost of $170,972 and $191,435, respectively) | $ | 161,880 | $ | 177,268 | |||
Affiliate investments (amortized cost of $25,546 and $29,081, respectively) | 27,778 | 26,324 | |||||
Total investments at fair value (amortized cost of $196,518 and $220,516, respectively) | 189,658 | 203,592 | |||||
Cash and cash equivalents | 3,893 | 6,793 | |||||
Interest and dividend receivable | 1,374 | 1,578 | |||||
Prepaid expenses | 2,163 | 2,682 | |||||
Other assets | — | 65 | |||||
Total assets | $ | 197,088 | $ | 214,710 | |||
LIABILITIES | |||||||
2026 Notes (net of deferred financing costs and original issue discount of $1,057 and $1,421, respectively) | 48,943 | 48,579 | |||||
2032 Convertible Notes (net of deferred financing costs and original issue discount of $999 and $1,117, respectively) | 14,001 | 13,883 | |||||
KeyBank Credit Facility (net of deferred financing costs of $982 and $1,322, respectively) | 38,571 | 54,615 | |||||
Management and incentive fees payable | 869 | 933 | |||||
Interest and financing fees payable | 949 | 973 | |||||
Accounts payable and accrued expenses | 833 | 722 | |||||
Payable for unsettled trades | 3,747 | — | |||||
Total liabilities | $ | 107,913 | $ | 119,705 | |||
Commitments and contingencies | |||||||
NET ASSETS | |||||||
Common stock, par value $0.01, 100,000,000 common shares authorized, 2,674,698 and 2,711,068 common shares issued and outstanding, respectively | $ | 27 | $ | 27 | |||
Capital in excess of par value | 188,405 | 191,038 | |||||
Total distributable loss | (99,257 | ) | (96,060 | ) | |||
Total net assets | $ | 89,175 | $ | 95,005 | |||
Total liabilities and net assets | $ | 197,088 | $ | 214,710 | |||
Net asset value per share | $ | 33.34 | $ | 35.04 | |||
Logan Ridge Finance CorporationConsolidated Statements of Operations (in thousands, except share and per share data) | |||||||||||
For the Years Ended December 31, | |||||||||||
2023 | 2022 | 2021 | |||||||||
INVESTMENT INCOME | |||||||||||
Interest income: | |||||||||||
Non-control/non-affiliate investments | $ | 18,536 | $ | 12,732 | $ | 10,068 | |||||
Affiliate investments | (170 | ) | 706 | 4,368 | |||||||
Control investments | — | 228 | 389 | ||||||||
Total interest income | 18,366 | 13,666 | 14,825 | ||||||||
Payment-in-kind interest and dividend income: | |||||||||||
Non-control/non-affiliate investments | 1,322 | (1) | 919 | 95 | |||||||
Affiliate investments | 162 | 187 | 361 | ||||||||
Total payment-in-kind interest and dividend income | 1,484 | 1,106 | 456 | ||||||||
Dividend income: | |||||||||||
Non-control/non-affiliate investments | — | — | 727 | ||||||||
Affiliate investments | 68 | 14 | 179 | ||||||||
Total dividend income | 68 | 14 | 906 | ||||||||
Other income: | |||||||||||
Non-control/non-affiliate investments | 258 | 141 | 479 | ||||||||
Affiliate investments | 1 | — | 88 | ||||||||
Total other income | 259 | 141 | 567 | ||||||||
Total investment income | 20,177 | 14,927 | 16,754 | ||||||||
EXPENSES | |||||||||||
Interest and financing expenses | 8,329 | 7,815 | 10,569 | ||||||||
Base management fee | 3,658 | 3,861 | 4,846 | ||||||||
Directors' expense | 540 | 493 | 410 | ||||||||
Administrative service fees | 895 | 620 | 1,039 | ||||||||
General and administrative expenses | 2,908 | 3,300 | 3,483 | ||||||||
Total expenses | 16,330 | 16,089 | 20,347 | ||||||||
NET INVESTMENT INCOME (LOSS) | 3,847 | (1,162 | ) | (3,593 | ) | ||||||
REALIZED AND UNREALIZED (LOSS) GAIN ON INVESTMENTS | |||||||||||
Net realized (loss) gain on investments: | |||||||||||
Non-control/non-affiliate investments | (16,393 | ) | 17,312 | (10,442 | ) | ||||||
Affiliate investments | — | 1,672 | 2,475 | ||||||||
Control investments | — | (5,215 | ) | — | |||||||
Net realized (loss) gain on investments | (16,393 | ) | 13,769 | (7,967 | ) | ||||||
Net change in unrealized appreciation (depreciation) on investments: | |||||||||||
Non-control/non-affiliate investments | 5,075 | (25,434 | ) | 13,058 | |||||||
Affiliate investments | 4,989 | (1,208 | ) | (908 | ) | ||||||
Control investments | — | 2,011 | (1,483 | ) | |||||||
Net change in unrealized appreciation (depreciation) on investments | 10,064 | (24,631 | ) | 10,667 | |||||||
Total net realized and change in unrealized (loss) gain on investments | (6,329 | ) | (10,862 | ) | 2,700 | ||||||
Net realized loss on extinguishment of debt | — | — | (1,025 | ) | |||||||
Total federal tax provision (benefit), net | — | — | — | ||||||||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (2,482 | ) | $ | (12,024 | ) | $ | (1,918 | ) | ||
NET DECREASE IN NET ASSETS PER SHARE RESULTING FROM OPERATIONS – BASIC & DILUTED | $ | (0.92 | ) | $ | (4.44 | ) | $ | (0.71 | ) | ||
WEIGHTED AVERAGE COMMON STOCK OUTSTANDING – BASIC & DILUTED | 2,694,857 | 2,711,068 | 2,711,068 | ||||||||
DISTRIBUTIONS PAID PER SHARE | $ | 0.96 | $ | — | $ | — |
(1) | During the year ended December 31, 2023, the Company received $0.2 million of non-recurring income that was paid-in-kind and included in this financial statement line item. |
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