Portman Ridge(US:PTMN)2024-03-14 16:15Financial Data and Key Metrics Changes - Total investment income for the full year 2023 was $76.3 million, an increase from $69.6 million in 2022, primarily driven by growth in interest income, PIK, dividend, and fee income [3][45] - Core investment income for 2023 was $74.5 million, up $10.3 million from $64.2 million in 2022 [3] - Total expenses for 2023 were $46.8 million, compared to $40.7 million in 2022, largely due to increased interest and amortization of debt issuance costs [33] - Net investment income for 2023 was $34.8 million or $3.66 per share [53] - Net asset value (NAV) per share increased from $22.65 to $22.76 quarter-over-quarter [45][74] Business Line Data and Key Metrics Changes - 55% of capital deployed in Q4 2023 was in existing portfolio companies, compared to 45% in new borrowers [2] - New investments made during the quarter are expected to yield a spread to SOFR of 780 to 798 basis points [12] - Originations for Q4 2023 were lower than the prior year, resulting in net repayments and sales of approximately $30.1 million [30] Market Data and Key Metrics Changes - Credit quality improved with a reduction in non-accruals, which decreased to seven investments at the end of Q4 2023 from eight in Q3 2023 [51] - The leverage ratio as of December 31, 2023, was 1.5 times on a gross basis and 1.2 times on a net basis [75] - The company maintained a diversified investment portfolio across 27 different industries and 100 different entities [71] Company Strategy and Development Direction - The company aims to maintain a diversified portfolio and invest in companies with strong return potential [2] - The investment strategy remains selective, focusing on existing portfolio companies over new borrowers [27] - The company continues to repurchase shares under a renewed stock buyback program, purchasing 224,933 shares for approximately $4.4 million in 2023 [48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver strong returns in 2024, citing a favorable investment environment with wide spreads and high SOFR [76][131] - The company noted that the investment environment is becoming more competitive, with spreads decreasing since February 2024 [130] - Management indicated that they are focused on macroeconomic conditions and the attractiveness of the investment environment when making leverage decisions [98] Other Important Information - The Board approved a dividend of $0.69 per share for Q1 2024, representing a 12.1% annualized return on asset value [11][55] - The company has $23 million of available borrowing capacity under the senior secured revolving credit facility [34] Q&A Session Summary Question: What is the longer-term plan for CLO investments? - Management indicated that they do not want to lend to companies below $15 million of EBITDA and are focused on maintaining their franchise size [41][42] Question: How should the balance sheet be viewed in coming quarters? - Management expects a reduction in liabilities and a consistent portfolio size, with a focus on debt repayment [58][59] Question: What are the trends in PIK for the quarter? - Management does not expect meaningful trends in PIK direction, as they consider both cash and PIK components in their investment decisions [109] Question: Can you discuss the new investments made? - New investments include Tactical Air, Morae Global Corporation, and CineMedia, all of which are expected to provide attractive returns [134][135][137]