Logan Ridge Finance (US:LRFC)2023-05-11 16:32Financial Data and Key Metrics Changes - Net investment income increased by 69% in Q1 2023, rising from $0.6 million ($0.23 per share) to $1.1 million ($0.40 per share) [3] - Total investment income rose by $700,000 to $5.3 million compared to the previous quarter and increased by $2 million compared to Q1 2022 [62] - Net asset value as of March 31, 2023, was $93.8 million ($34.63 per share), down from $95 million ($35.04 per share) at the end of Q4 2022 [42] Business Line Data and Key Metrics Changes - The debt investment portfolio represented 83.1% of the total portfolio at fair value, with a weighted average annualized yield of approximately 10.7% [6] - Non-yielding equity portfolio represented 16.4% (cost) and 14.6% (fair value) of the portfolio, compared to 16.3% and 14.2% in the previous quarter [39] - First lien debt represented 65.4% (cost) and 67.7% (fair value) of the total portfolio, compared to 64.9% and 67.3% in the prior quarter [60] Market Data and Key Metrics Changes - The company had $9.3 million in cash and cash equivalents and $16.6 million of unused borrowing capacity available for investments [10] - The company made approximately $7.4 million in new investments and had $6.7 million in repayments and sales, resulting in a net deployment of approximately $0.7 million for the quarter [38] Company Strategy and Development Direction - The company is focused on maximizing the earnings power of its balance sheet and capital structure to increase total returns to shareholders [58] - The management is cautiously optimistic for 2023, despite navigating a challenging market environment [35] - The company plans to continue repurchasing shares under a $5 million share repurchase program, which began on March 23, 2023 [36] Management's Comments on Operating Environment and Future Outlook - Management noted that the current credit environment presents opportunities for the company to capitalize on [58] - The company is actively engaged with constituents to work on a pathway forward for investments in non-accrual status [7] - Management expressed confidence in the portfolio's fair value marks and potential long-term upside in certain positions [20] Other Important Information - Total operating expenses for Q1 2023 increased to $4.2 million from $3.9 million in Q4 2022, primarily due to higher interest and financing expenses [9] - The company reported a significant turnaround compared to Q1 2022, where it had a net investment loss of $1.1 million [63] Q&A Session Summary Question: Will there be further dividend increases in the coming quarters? - Management indicated that the intention is to increase the dividend over time as earnings continue to grow and there is more certainty around the forward trajectory of earnings [66][67] Question: What is the plan regarding the credit facility versus raising new capital? - Management confirmed the intent to use the credit facility for increasing leverage or deploying capital rather than issuing new bonds [46] Question: How does the company view the current portfolio's performance and potential exits from legacy positions? - Management acknowledged that while the environment remains slower, there are unique opportunities to create catalysts for exiting legacy equity investments [45][73]