Logan Ridge Finance Corporation (LRFC) reported its Q4 2024 earnings, significantly surpassing analyst expectations with an earnings per share (EPS) of $0.56, compared to the forecasted $0.37. The company also reported revenue of $5.4 million, exceeding the anticipated $5 million. Despite this positive financial performance, Logan Ridge’s stock saw a decline of 1.88% in after-hours trading, closing at $24.67. According to InvestingPro data, the company has struggled with profitability over the last twelve months, though it maintains strong liquidity with a current ratio of 2.78.
Key Takeaways
- Logan Ridge Finance’s EPS of $0.56 beat the forecast by $0.19.
- Total investment income reached a record high of $20.9 million.
- The stock dropped 1.88% to $24.67 after the earnings announcement.
- The company is preparing for a merger with Portman Ridge Finance Corporation.
Company Performance
Logan Ridge Finance Corporation achieved a record total investment income of $20.9 million for the year, with Q4 alone contributing $5.4 million. This marks an increase of $300,000 from the previous quarter, highlighting the company’s strong performance amid a competitive financial sector. The net investment income for the year was $4.2 million, or $1.56 per share, showcasing robust profitability.
Financial Highlights
- Revenue: $5.4 million in Q4 2024, up from $5.1 million in Q3.
- Earnings per share: $0.56, exceeding the forecast of $0.37.
- Net asset value: $85.1 million, a decrease of 1.4% from the previous quarter.
- Cash and cash equivalents: $15 million.
- Unused borrowing capacity: $26.2 million.
Earnings vs. Forecast
Logan Ridge Finance’s Q4 2024 EPS of $0.56 surpassed the forecasted $0.37 by 51.35%. This significant beat reflects the company’s successful operational strategies and investment decisions, including the exit from major equity positions.
Market Reaction
Despite the positive earnings surprise, Logan Ridge’s stock fell by 1.88% in after-hours trading, closing at $24.67. This movement contrasts with the broader market trend and may reflect investor caution regarding the company’s future plans, including its impending merger with Portman Ridge Finance Corporation.
Outlook & Guidance
Logan Ridge Finance remains committed to its disciplined investment strategy and plans to stay active in the market. The upcoming merger with Portman Ridge is expected to provide greater scale and improved efficiencies. The company maintained its dividend at $0.36 per share, indicating confidence in its ongoing financial health.
Executive Commentary
CEO Ted Goldpour described 2024 as "a profoundly transformative year for Logan Ridge," emphasizing the potential benefits of the merger with Portman Ridge. Patrick Schafer, CIO, reiterated the company’s focus on reducing equity positions to optimize the portfolio.
Risks and Challenges
- Market volatility: The financial sector’s inherent volatility could impact future earnings.
- Merger integration: Successfully merging with Portman Ridge poses operational challenges.
- Interest rate fluctuations: With 87.9% of debt investments having floating rates, changes in interest rates could affect profitability.
Q&A
During the earnings call, analysts inquired about the merger details, specifically the overlap of board members between Logan Ridge and Portman Ridge. The company confirmed that there are no immediate plans to alter the board compensation structure, maintaining stability in leadership.
Full transcript - Logan Ridge Finance Corp (LRFC) Q4 2024:
Conference Operator: you for standing by. Good morning, and welcome to Logan Ridge Finance Corporation’s Fourth Quarter and Full Year Ended December. An earnings press release was distributed yesterday, 03/30/2025, after the close of the market. A copy of the release along with a supplemental earnings presentation is available on the company’s website at www.loganridgefinance.com in the Investor Resources section and should be reviewed in conjunction with the company’s Form 10 K filed with the SEC. 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 or results 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. Speaking on today’s call will be Ted Goldpore, Chief Executive Officer, President and Director of Logan Ridge Finance Corporation Brandon Satterin, Chief Financial Officer and Patrick Schafer, Chief Investment Officer. With that, I would now like to turn the call over to Ted Goldpour, Chief Executive Officer of Logan Ridge Finance Corporation. Please go ahead, Ted.
Ted Goldpour, Chief Executive Officer, President and Director, Logan Ridge Finance Corporation: Good morning, and welcome to our fourth quarter and full year twenty twenty four earnings call. As mentioned, I’m joined today by our Chief Financial Officer, Brandon Satoran and our Chief Investment Officer, Patrick Schafer. Following my opening remarks, Patrick will provide additional details on our investment activity to date and Brandon will walk through the financials. 2024 was a profoundly transformative year for Logan Ridge as we continue to build upon the record results seen in 2023 and made significant strides in the rotation out of our legacy equity portfolio. This is the strongest year of financial performance for Logan Ridge since Mount Logan management took over as the company’s investment advisor in July of twenty twenty one.
’20 ’20 four’s results were highlighted by the highest total investment income and net investment income in our history at $20,900,000 and $4,200,000 or 1.56 per share respectively. A hallmark of 2024 however was our successful sale of our largest equity position nth degree for $17,500,000 in cash, which was a significant catalyst for the accretive combination with Portman Ridge announced in January. This exit was a major achievement in our long term strategy to rotate out of our legacy equity portfolio, which has been a central focus to the turnaround strategy for Multnomah Ridge. Further building on our success, I’m very pleased to announce that in February of twenty twenty five, we exited our second largest non yielding equity investment in GA Communications. We also ended the year with no new non accruals during the fourth quarter twenty twenty four.
Additionally, during 2024, we further strengthened our balance sheet by successfully amending and extending our revolving credit facility with KeyBanc. The amendment further termed out our debt capital structure and reduced our cost of financing, while also increasing our financial flexibility. Combination of these collective achievements paved the way for a combination with Portman Ridge Finance Corporation, which the board approved in January. Successful combination of the two companies will be a significant milestone for BC Partners’ credit platform, we believe will be accretive for both sets of shareholders. We believe this combination has the potential to provide greater scale, improved operating efficiencies and increased trading volume in the stock, all of which should create incremental value for shareholders.
The next step towards the completion of the merger is the special meeting of shareholders where investors will be asked to vote to approve the merger after the N14 is declared effective by the SEC. We invite our shareholders to vote for the merger when they receive their proxy card. Both Portman and Logan’s Board of Directors have unanimously recommended that shareholders vote for the merger. Due to the strong financial and operational performance seen in 2024, the Board of Directors approved a dividend of $0.36 per share for the fourth quarter twenty twenty four, which remains flat to the prior quarter. Reflecting on the year, we are incredibly proud of what we were able to accomplish.
Looking ahead, we expect to remain active in the market with a healthy deployment pipeline, our disciplined and prudent investment strategy, and our experienced management team, we believe we are well positioned to continue delivering meaningful returns to our stakeholders. With that, I will turn the call over to Patrick to discuss our portfolio and investment activities.
Patrick Schafer, Chief Investment Officer, Logan Ridge Finance Corporation: Thanks Ted and hello everyone. As of 12/31/2024, the fair value of Logan’s portfolio was approximately $172,300,000 with exposure to 59 portfolio companies. This compares to 59 portfolio companies with a fair value of approximately $75,600,000 as of the prior quarter and 60 portfolio companies with a fair value of $189,700,000 as of 12/31/2023. During the year ended 12/31/2024, we continue to be selective in our investment strategy. We deployed approximately $38,300,000 in new and existing investments and had approximately $55,000,000 in repayments and sales, resulting in net repayments and sales of approximately $16,700,000 for the year.
Of note, net deployments reflects the $17,500,000 of proceeds from nth degree received in late Q3 and $5,300,000 of repayment from Critical Nurse, which was received on the last day of the year. Now on to portfolio composition. As of 12/31/2024, ’60 ’6 point ’7 percent of the company’s investment portfolio at fair value was invested in assets originated by the BC Partners Credit Platform, up from 65.4% at the end of last year. Also as of 12/31/2024, our debt investment portfolio represented 83.3% of the total portfolio at fair value with a weighted average annualized yield of approximately 10.7 excluding income from non accruals and collateralized loan obligations and 87.9% of our debt investment portfolio at fair value was bearing interest at a floating rate. Additionally, as of 12/31/2024, first lien debt represented 64.4 percent and 64.7 percent of our total portfolio on a cost and fair value basis respectively and the equity portfolio represented 13.413.8% of the portfolio on a cost and fair value basis respectively as of 12/31/2024.
Moving on to non accrual status, as of 12/31/2024, the company had four debt investments across three portfolio companies on non accrual status with an aggregate amortized cost and fair value of $17,200,000 and $7,900,000 respectively or 94.6% of the investment portfolio at cost and fair value respectively. This has remained relatively stable since the third quarter of twenty twenty four with four debt investments in three portfolio companies with a cost and fair value of 17 point two percent $70,200,000 and $8,200,000 respectively or 8.84.6% of the investment company’s investment portfolio’s cost and fair value respectively. I’ll now turn the call over to Brandon.
Brandon Satoran, Chief Financial Officer, Logan Ridge Finance Corporation: Thanks, Patrick. Turning to our financial results for the quarter ended 12/31/2024. For the quarter ended 12/31/2024, Logan Ridge generated $5,400,000 of investment income, a $300,000 increase as compared to $5,100,000 reported for the quarter ended 09/30/2024. The increase in investment income compared to the prior quarter was primarily due to the receipt of $300,000 of non recurring other income as well as an increase of $100,000 in distributions received from our Great Lakes joint venture. For the quarter ended 12/31/2024, Logan Ridge had $3,900,000 of total expenses, which decreased by $300,000 from $4,200,000 of total expenses reported in the prior quarter.
The decrease is primarily due to lower average outstanding debt as well as a full quarter’s benefit of a basis point spread reduction on the KeyBanc credit facility as part of the August 2024 amendment. Accordingly, net investment income for the fourth quarter was $1,500,000 or 0.56 per share, an increase of $500,000 or $0.19 per share from the third quarter of twenty twenty four. Our net asset value as of 12/31/2024 was $85,100,000 representing a $1,200,000 decrease or 1.4% compared to the prior quarter net asset value of $86,300,000 as of 09/30/2024. On a per share basis, net asset value was $32.04 per share as of 12/31/2024, representing a $0.27 decrease per share or 0.6% as compared to $32.31 per share as of 09/30/2024. The difference between the decrease of one point four percent and zero point six percent is the accretive effect of our buyback program.
Finally, as of 12/31/2024, the company had $15,000,000 in cash and cash equivalents as well as $26,200,000 of unused borrowing capacity available for deployment in new investments. With that, I will turn the call back over to Ted.
Ted Goldpour, Chief Executive Officer, President and Director, Logan Ridge Finance Corporation: Thank you, Brandon. To our shareholders, thank you so much for your continued support. This concludes our prepared remarks and we’ll now turn the call over to the operator for any questions.
Conference Operator: Thank you. We will now begin the question and answer session. Our first question comes from the line of Christopher Nolan with Ladenburg Thalmann. Please go ahead.
Christopher Nolan, Analyst, Ladenburg Thalmann: Hey guys, congratulations on a good quarter. And I guess looking and a lot of the questions I think were answered in the last call. But looking forward, do you anticipate the Logan portfolio just to be subsumed into Portman Ridge? Or is it going to be anything else where you might be lowering the equity exposure more? How do you see the combined portfolio going forward?
I guess is a succinct way to ask.
Ted Goldpour, Chief Executive Officer, President and Director, Logan Ridge Finance Corporation: Hey, Chris, I’ll go first. Yes, I mean, I think it’s going to be just a straight merger. Obviously, Patrick had mentioned in his remarks, we were able to exit another equity position this quarter. I think from our perspective, it’s still a big focus of ours, but I don’t think there’s a big we’re not going to leave behind a StubCo or a CVR or anything like that. I think the intention is just to kind of blend the portfolios together.
Patrick Schafer, Chief Investment Officer, Logan Ridge Finance Corporation: Yes, that’s right. I mean, as Ted said, between nth degree, which was during last year and then GA Communications, which we noted is Q1, that equity percentage just of Logan is going to go down that much more and in a pro form a company it’s going to be that much smaller. So I think we’re still going to focus on a go forward basis of reducing those equity exposures and reinvesting the proceeds. But I don’t think we’re going to take a different tact with the equity positions or our general investment thesis on a pro form a basis. I think we would prefer to reduce those as much as possible.
And as you’ve seen more so in Portman than Logan, just because there was an existing equity book, we have a number of positions within Portman where we have kind of a mix of a first lien debt and like a structured preferred equity. And that’s sort of how we kind of use our equity bucket there is something that is not common, but it’s either warrants that we’re getting for free or something that’s more structured that we think is ultimately kind of a high very, very high double digit very, very high teens or low 20% return over time through structuring as opposed to through enterprise value creation and dividend. So I think our Portman business has a bit of different strategy on how we use a equity bucket to try and focus on yield generating equity positions as opposed to NAV generating necessarily. So I don’t think any of that will change and we’ll continue to be as active as we can on reducing those equity positions post closing.
Christopher Nolan, Analyst, Ladenburg Thalmann: Okay. And then for the Board of Directors going forward, I mean, do both companies sort of have significant overlaps in Board members or
Patrick Schafer, Chief Investment Officer, Logan Ridge Finance Corporation: is it going
Christopher Nolan, Analyst, Ladenburg Thalmann: to be sort of a combination of two different groups?
Patrick Schafer, Chief Investment Officer, Logan Ridge Finance Corporation: No. So the Logan Board members are 100% overlap with Portman. There are additional Board members on Portman in how we set up the special committees, but the all of the Logan Board members are existing Portman Board members. So that will effectively kind of go away as doing double director duty.
Christopher Nolan, Analyst, Ladenburg Thalmann: Okay. And any consideration of given the merger and all the strategic discussions, how about putting the board member compensation purely in stock? I mean, not for all dividend paying stock and it sort of really aligns interest. Any discussion on that?
Ted Goldpour, Chief Executive Officer, President and Director, Logan Ridge Finance Corporation: We haven’t talked about that. I mean, historically, it’s the same issue for management because we’re getting obviously management fees to manage the vehicle, we’re not there’s a 40 Act rule where we’re actually not allowed to pay executives in stock. I actually would assume that applies to the Board as well, but I don’t know. I mean, historically, we’ve looked into paying our executives in stock and you’re not allowed to under the 40 Act. I don’t know if that’s the case for the Board, but I would assume it’s the same thing.
I don’t know. I would have to check that.
Christopher Nolan, Analyst, Ladenburg Thalmann: Okay. Thanks. Bye.
Ted Goldpour, Chief Executive Officer, President and Director, Logan Ridge Finance Corporation: Good idea.
Conference Operator: As there are no further questions at this time, I would now like to turn the call over to Ted Goldpour for closing remarks.
Ted Goldpour, Chief Executive Officer, President and Director, Logan Ridge Finance Corporation: Great. Well, thank you very much. And everybody have a great weekend. And again, we also we just want to thank our shareholders one last time. Thank you very much.
Conference Operator: This concludes today’s call. You may now disconnect.
: Please wait. The conference will begin shortly.
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