Portman Ridge(US:PTMN)2022-11-09 20:07Financial Data and Key Metrics Changes - Total investment income for Q3 2022 was $19 million, an increase of $3.6 million from $15 million in Q2 2022, driven by rising rates [19][4] - Net investment income for Q3 2022 was $8.4 million or $0.87 per share, compared to $5.5 million or $0.57 per share in Q2 2022 [21] - Total expenses for Q3 2022 were $10.6 million, up from $9.1 million in Q2 2022, primarily due to increased interest expenses [22] - Net asset value at the end of Q3 2022 was $251.6 million or $26.18 per share, down from $261.7 million or $27.26 per share in Q2 2022 [22] Business Line Data and Key Metrics Changes - Net deployments for the quarter were approximately $2.4 million, with new fundings of $44.3 million offset by $41.9 million in repayments [15][10] - The average interest coverage in the portfolio was 3.5x, with LTM revenues growing by 4.5% [10] Market Data and Key Metrics Changes - Leveraged loan new issue volume declined over 80% year-over-year, and loan prices fell from 95% of par in August to 92% by the end of September [6][7] - Approximately 89.3% of the debt securities portfolio were floating rate, with 71% linked to LIBOR [12] Company Strategy and Development Direction - The company is focused on being selective and resourceful in investment decisions, taking advantage of opportunities arising from the current market environment [11] - The management emphasized a cautious investment strategy due to economic uncertainty, while also indicating a strong position for future growth [11][25] Management's Comments on Operating Environment and Future Outlook - Management noted that the current economic environment is challenging, but they expect strong financial performance to continue in future quarters [4][28] - There is a positive outlook on interest income as rates continue to rise, with expectations for incremental income generation [34][35] Other Important Information - The company announced a quarterly dividend increase of 6% to $0.67 per share, reflecting strong financial performance [5][26] - The debt-to-equity ratio was 1.5x on a gross basis and 1.3x on a net basis, with an asset coverage ratio of 167% [25] Q&A Session Summary Question: Were there any non-recurring items in earnings? - Management indicated that there were no significant non-recurring items, and the quarter reflected a normal run rate [31][32] Question: Is the new dividend of $0.67 potentially low? - Management acknowledged the uncertainty in the environment but noted that there are no current credit quality issues, suggesting a potential for future dividend increases [35][36] Question: Can you explain the significant jump in projected earnings? - Management clarified that the projection included purchase accounting accretion and was based on changing benchmark rates without additional assumptions [42][44] Question: What is the expectation for future dividend increases? - Management expressed a desire to be conservative while also indicating a positive momentum for future dividend increases [49][50] Question: How is the deal flow and quality of deals changing? - Management noted that the market has improved, with wider spreads and better quality deals available compared to six months ago [58][59] Question: What is the status of the joint ventures? - Management explained that there was a temporary return of capital due to the expiration of the investment period in a joint venture, but they expect to return to previous levels soon [54][56]