Portman Ridge(PTMN) - 2025 Q2 - Quarterly Results

Executive Summary & Recent Developments This section summarizes Portman Ridge Finance Corporation's Q2 2025 performance, strategic merger, and rebranding initiatives Second Quarter 2025 Highlights Portman Ridge Finance Corporation announced its Q2 2025 financial results, highlighted by the completion of the Logan Ridge merger, which is expected to enhance scale, diversification, and liquidity. The company also plans to rebrand as BCP Investment Corporation. Key financial metrics for the quarter showed an increase in total investment income and net investment income compared to the prior quarter - On July 15, 2025, Portman Ridge completed the merger with Logan Ridge Finance Corporation, with Portman Ridge as the surviving company[5] - The combined company's total assets are expected to exceed $600 million (as of July 11, 2025), aiming for enhanced scale, diversified portfolio, cost savings, and improved stock trading liquidity[5] - Portman Ridge will rebrand and operate under the name BCP Investment Corporation, trading on Nasdaq under the new ticker symbol 'BCIC'[5] Q2 2025 Financial Highlights (vs. Q1 2025) | Metric | Q2 2025 (Millions) | Q1 2025 (Millions) | Change (Millions) | Change (%) | | :---------------------- | :----------------- | :----------------- | :---------------- | :--------- | | Total Investment Income | $12.6 | $12.1 | $0.5 | 4.1% | | Core Investment Income | $12.6 | $12.1 | $0.5 | 4.1% | | Net Investment Income | $4.6 | $4.3 | $0.3 | 7.0% | | NII Per Share | $0.50 | $0.47 | $0.03 | 6.4% | Management Commentary CEO Ted Goldthorpe emphasized the company's strategic progress in Q2, including strong net investment income and the successful Logan Ridge merger. He highlighted the merger's potential for increased scale, diversification, and financial flexibility, and announced the upcoming rebranding to BCP Investment Corporation to align with BC Partners - CEO Ted Goldthorpe noted the generation of net investment income of $4.6 million ($0.50 per share) in Q2, up from $4.3 million ($0.47 per share) in the prior quarter, maintaining focus on a high-quality portfolio and long-term shareholder value[7] - The Logan Ridge merger is a 'transformational milestone' expected to provide increased scale, broader portfolio diversification, enhanced financial flexibility, and earnings accretion through cost synergies[8] - The company will change its corporate name to BCP Investment Corporation (Nasdaq: BCIC) to reflect alignment with BC Partners, a global alternative investment platform[9] Subsequent Events & Merger Details Subsequent events include the declaration of Q3 2025 quarterly base and supplemental distributions. Detailed terms of the Logan Ridge acquisition were provided, outlining the share conversion ratio and additional cash payments to former Logan Ridge shareholders Net Asset Value (NAV) Comparison | Metric | June 30, 2025 | March 31, 2025 | | :----- | :------------ | :------------- | | NAV | $164.7 million| $173.5 million | | NAV/Share | $17.89 | $18.85 | - On August 7, 2025, the Company declared a regular quarterly base distribution of $0.47 per share and a supplemental cash distribution of $0.02 per share, payable on August 29, 2025[10] - In the Logan Ridge acquisition, each share of LRFC common stock was converted into 1.500 newly-issued shares of Portman Ridge common stock, with additional cash payments to LRFC shareholders[10] Financial Performance Overview This section details Portman Ridge Finance Corporation's financial results for Q2 2025, including investment income, expenses, and net asset changes Selected Financial Highlights The company reported a decrease in total investment income and net investment income for Q2 2025 compared to Q2 2024. Net asset value also declined from the previous quarter. The investment portfolio fair value decreased, though debt investments on non-accrual remained stable, and the weighted average annualized yield was 10.7% Key Financial Highlights (Q2 2025 vs Q2 2024) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | Change (%) | | :---------------------- | :----------------- | :----------------- | :---------------- | :--------- | | Total Investment Income | $12.6 | $16.3 | $(3.7) | -22.7% | | Core Investment Income | $12.6 | $16.2 | $(3.6) | -22.2% | | Net Investment Income | $4.6 | $6.5 | $(1.9) | -29.2% | | NII Per Share | $0.50 | $0.70 | $(0.20) | -28.6% | Investment Portfolio & Debt Metrics (June 30, 2025) | Metric | Value (June 30, 2025) | Value (March 31, 2025) | | :----------------------------------- | :-------------------- | :--------------------- | | Investment Portfolio (Fair Value) | $395.1 million | $406.4 million | | Number of Portfolio Companies | 96 | 93 | | Debt Investments on Non-Accrual (Fair Value) | 2.1% | 2.6% | | Weighted Average Annualized Yield | 10.7% | N/A | | Asset Coverage Ratio | 165% | 168% | | Net Leverage | 1.4x | 1.3x | Results of Operations The consolidated statements of operations show a decline in total investment income and net investment income for both the three and six months ended June 30, 2025, compared to the same periods in 2024. Net realized losses on investments increased significantly, contributing to a net decrease in net assets from operations Consolidated Results of Operations (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total investment income | $12,630 | $16,337 | $24,748 | $32,863 | | Total expenses | $8,073 | $9,860 | $15,851 | $20,161 | | Net Investment Income | $4,557 | $6,477 | $8,897 | $12,702 | | Net realized gain (loss) on investments | $(15,840) | $(6,922) | $(16,013) | $(8,979) | | Net change in unrealized gain (loss) on investments | $6,628 | $(5,966) | $2,725 | $(5,895) | | Net Increase (Decrease) in Net Assets Resulting from Operations | $(4,518) | $(6,372) | $(4,600) | $(1,887) | | Net Investment Income Per Common Share | $0.50 | $0.70 | $0.97 | $1.36 | Investment Income Composition Investment income for Q2 2025 was primarily driven by interest income, which saw a decrease compared to Q2 2024. Payment-in-kind (PIK) income increased, while CLO and JV income decreased year-over-year Investment Income Composition (in thousands) | Income Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest income (excl. CLO & purchase discount) | $8,573 | $11,589 | $16,095 | $23,675 | | Purchase discount accretion | $0 | $112 | $16 | $185 | | PIK income | $2,449 | $2,201 | $5,510 | $4,207 | | CLO income | $214 | $524 | $292 | $1,081 | | JV income | $1,213 | $1,800 | $2,630 | $3,453 | | Fees and other income | $181 | $111 | $205 | $262 | | Total Investment Income | $12,630 | $16,337 | $24,748 | $32,863 | | Core Investment Income | $12,630 | $16,225 | $24,732 | $32,678 | Investment Portfolio and Capital Structure This section outlines the composition and fair value of the investment portfolio, along with the company's liquidity, capital resources, and interest rate risk exposure Fair Value of Investments As of June 30, 2025, the investment portfolio at fair value was $395.1 million, primarily composed of First Lien Debt (73.7%). The total portfolio decreased slightly from December 31, 2024, with minor shifts in the percentage allocation across security types Investment Portfolio Composition by Security Type (Fair Value, in thousands) | Security Type | June 30, 2025 Fair Value | Percentage of Total Portfolio | December 31, 2024 Fair Value | Percentage of Total Portfolio | | :------------------------ | :----------------------- | :---------------------------- | :--------------------------- | :---------------------------- | | First Lien Debt | $291,071 | 73.7% | $289,957 | 71.6% | | Second Lien Debt | $30,276 | 7.7% | $28,996 | 7.2% | | Subordinated Debt | $1,750 | 0.4% | $1,740 | 0.4% | | Collateralized Loan Obligations | $3,263 | 0.8% | $5,193 | 1.3% | | Joint Ventures | $44,634 | 11.3% | $54,153 | 13.4% | | Equity | $23,919 | 6.1% | $24,762 | 6.1% | | Derivatives | $196 | 0.0% | $220 | 0.0% | | Total | $395,109 | 100.0% | $405,021 | 100.0% | Liquidity and Capital Resources As of June 30, 2025, the company had $255.4 million in outstanding borrowings with a weighted average interest rate of 6.0%. Cash and cash equivalents totaled $11.2 million (unrestricted) and $13.4 million (restricted), with $52.6 million available under the JPM Credit Facility - Outstanding borrowings as of June 30, 2025, were $255.4 million (par value) at a weighted average interest rate of 6.0%[15] Cash and Cash Equivalents (in thousands) | Cash Type | June 30, 2025 | December 31, 2024 | | :------------------ | :------------ | :---------------- | | Cash and Cash Equivalents | $11,222 | $17,532 | | Restricted Cash | $13,357 | $22,421 | - The Company had $52.6 million of available borrowing capacity under the JPM Credit Facility as of June 30, 2025[16] Interest Rate Risk The company's investment income is significantly influenced by interest rate fluctuations, with approximately 86.9% of its Debt Securities Portfolio being floating rate. A sensitivity analysis indicates that a 1% increase in interest rates would increase net investment income by $1.477 million, while a 1% decrease would reduce it by the same amount - Approximately 86.9% of the Debt Securities Portfolio (at par value) were floating rate as of June 30, 2025, with 86.5% of these loans containing interest rate floors[17] Impact on Net Investment Income from Interest Rate Changes (in thousands) | Change in Interest Rate | Impact on Net Investment Income | | :---------------------- | :------------------------------ | | +1% | $1,477 | | +2% | $2,955 | | +3% | $4,432 | | -1% | $(1,477) | | -2% | $(2,912) | | -3% | $(4,105) | Corporate Information This section provides details on the company's corporate structure, investor relations, and important legal disclaimers regarding forward-looking statements Conference Call and Webcast Portman Ridge Finance Corporation will host a conference call and webcast on August 8, 2025, to discuss its second quarter 2025 financial results, with replay and online archive available - A conference call to discuss Q2 2025 financial results will be held on Friday, August 8, 2025, at 10:00 am Eastern Time[21] - A live audio webcast and replay will be available on the Company's website www.portmanridge.com in the Investor Relations section[23] About Portman Ridge Finance Corporation Portman Ridge Finance Corporation is a publicly traded Business Development Company (BDC) that originates, structures, finances, and manages a portfolio of middle-market investments. Its investment activities are managed by Sierra Crest Investment Management LLC, an affiliate of BC Partners Advisors L.P - Portman Ridge Finance Corporation is a publicly traded, externally managed investment company regulated as a Business Development Company (BDC)[24] - The company's business focuses on originating, structuring, financing, and managing a portfolio of term loans, mezzanine investments, and selected equity securities in middle-market companies[24] - Investment activities are managed by Sierra Crest Investment Management LLC, an affiliate of BC Partners Advisors L.P[24] About BC Partners Advisors L.P. and BC Partners Credit BC Partners is a prominent international investment firm specializing in private equity, private credit, and real estate. BC Partners Credit, launched in 2017, leverages the firm's extensive expertise to identify attractive credit opportunities across various market environments and sectors - BC Partners is a leading international investment firm with strategies in private equity, private credit, and real estate[26] - BC Partners Credit, launched in February 2017, focuses on identifying attractive credit opportunities by leveraging BC Partners' deal sourcing and infrastructure[27] Cautionary Statement Regarding Forward-Looking Statements This section serves as a standard legal disclaimer, advising that forward-looking statements are based on current expectations and involve substantial risks and uncertainties. It lists various factors that could cause actual results to differ materially from projections, including economic conditions, competition, and regulatory changes - The press release contains forward-looking statements based on current management expectations, subject to substantial risks and uncertainties[28] - Important factors that could cause actual results to differ include uncertainty of financial performance, expected synergies from mergers, business strategy implementation, evolving legal/regulatory/tax regimes, and changes in economic conditions[29][30] - Readers are advised to consult the Company's SEC filings, including Form 10-K, 10-Q, and 8-K, for more information on risks and uncertainties[30] Contacts Contact information is provided for Portman Ridge Finance Corporation, including its Chief Financial Officer, and for investor relations through The Equity Group Inc - Contact for Portman Ridge Finance Corporation: Brandon Satoren, Chief Financial Officer (Brandon.Satoren@bcpartners.com, (212) 891-2880)[31] - Investor Relations contacts: Lena Cati (lcati@equityny.com, (212) 836-9611) and Val Ferraro (vferraro@equityny.com, (212) 836-9633) at The Equity Group Inc[31] Consolidated Financial Statements This section presents the company's consolidated balance sheets and statements of operations, providing a detailed view of its financial position and performance Consolidated Statements of Assets and Liabilities The consolidated balance sheet as of June 30, 2025, shows total assets of $427.995 million, a decrease from $453.634 million at December 31, 2024. Total investments at fair value also decreased, while total liabilities and net assets saw corresponding changes Consolidated Statements of Assets and Liabilities (in thousands) | ASSETS | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Total Investments at fair value | $395,109 | $405,021 | | Cash and cash equivalents | $11,222 | $17,532 | | Restricted cash | $13,357 | $22,421 | | Total Assets | $427,995 | $453,634 | | LIABILITIES | | | | 4.875% Notes Due 2026 | $107,356 | $106,983 | | Great Lakes Portman Ridge Funding LLC Revolving Credit Facility | $146,306 | $158,157 | | Total Liabilities | $263,266 | $275,141 | | NET ASSETS | | | | Total Net Assets | $164,729 | $178,493 | | Net Asset Value Per Common Share | $17.89 | $19.41 | Consolidated Statements of Operations The consolidated income statement for the three and six months ended June 30, 2025, shows a decrease in total investment income and net investment income compared to the prior year. Net realized losses on investments significantly impacted the net increase (decrease) in net assets resulting from operations Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total investment income | $12,630 | $16,337 | $24,748 | $32,863 | | Total expenses | $8,073 | $9,860 | $15,851 | $20,161 | | Net Investment Income | $4,557 | $6,477 | $8,897 | $12,702 | | Net realized gain (loss) on investments | $(15,840) | $(6,922) | $(16,013) | $(8,979) | | Net change in unrealized appreciation (depreciation) on investments | $6,628 | $(5,966) | $2,725 | $(5,895) | | Net Increase (Decrease) in Net Assets Resulting from Operations | $(4,518) | $(6,372) | $(4,600) | $(1,887) | | Net Investment Income Per Common Share | $0.50 | $0.70 | $0.97 | $1.36 |