Portman Ridge(US:PTMN)2024-08-09 23:10Financial Data and Key Metrics Changes - The company reported net investment income of $6.5 million or $0.70 per share, an increase of $300,000 or $0.03 per share compared to the prior quarter [3][16] - Total investment income for Q2 2024 was $16.3 million, down from $16.5 million in Q1 2024, primarily due to lower interest income [14] - The net asset value decreased to $196.4 million or $21.21 per share, a decline of $14.2 million or $1.36 per share from the previous quarter [16] Business Line Data and Key Metrics Changes - The investment portfolio remained diversified across 28 industries and 75 unique portfolio companies, with an average par balance of $2.6 million [4][10] - The company made only two new investments during the quarter, totaling $7.3 million, while most additions were incremental capital to existing portfolio companies [8][10] Market Data and Key Metrics Changes - Private credit spreads for borrowers with greater than $100 million of EBITDA have declined by approximately 75 basis points since the beginning of the year [7] - The company experienced net repayments and sales of approximately $18.2 million during the quarter, with originations lower than the previous quarter [9][10] Company Strategy and Development Direction - The company amended and extended its senior secured revolving credit facility with JPMorgan, increasing the facility size by $85 million to $200 million and reducing the applicable margin [5][18] - The strategy focuses on maintaining a well-diversified portfolio while being selective with new investment opportunities [7][8] Management's Comments on Operating Environment and Future Outlook - Management noted that the macro trends from Q1 continued into Q2, with increased new deal activity and a competitive syndicated market [6] - The company remains confident in its business position and believes it can deliver strong returns for shareholders in the latter half of 2024 [19] Other Important Information - The Board of Directors approved a $0.69 per share distribution for Q3 2024, representing a 13% annualized return on net asset value [6] - The company repurchased 79,722 shares for an aggregate cost of $1.6 million during the quarter, which was accretive to net asset value [6] Q&A Session Summary Question: What was the driver for the realized loss and the unrealized depreciation? - The primary driver for unrealized loss was QualTek, which was exited shortly after the quarter-end, leading to a write-down [19][20] Question: Can you provide perspective on the BDC M&A market? - Management indicated that while there is strategic activity in the broader asset space, the BDC space remains relatively quiet [23][24] Question: Is there anything broader impacting the high-tech industry in the portfolio? - Management noted longer sales cycles and competition from AI spending affecting traditional software budgets [25] Question: What is the status of PIK income? - PIK income has been flat, with a mix of penalty and extra income, and recent deals have included structured equity solutions [34][36] Question: Are there any trends in amendments, extensions, or waivers? - There has not been a material pickup in amendment and waiver activity, with the market normalizing [33]