Logan Ridge Finance Corporation

Good morning and welcome to Logan Ridge Finance Corporation's third quarter ended September 30th, 2022 earnings conference call. An earnings press release was distributed yesterday after the close of market. A copy of the release along with supplemental earnings presentation is available on the company's website at www.LoganRidgeFinance.com in the investor resources section. and should be reviewed in conjunction with the company's form 10-Q filed with the SEC. As a reminder, this conference call is being recorded for replay purposes. Please note that today's conference call may contain forward-looking statements which are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statement as a result of a number of factors, including those described in the company's filing with the SEC. Logan Ridge Finance Corporation assumes no obligation to update any such forward-looking statement unless required by law. Speaking on today's call will be Ted Goldthorpe, Chief Executive Officer, President and Director of Logan Ridge Finance Corporation, Jason Ruth, Chief Financial Officer, and Patrick Schaefer, Chief Investment Officer. With that, I would now like to turn the call over to Ted Goldthorpe, Chief Executive Officer of Logan Ridge Finance Corporation.

Thank you. Good morning and welcome to our third quarter 2022 earnings call. As mentioned, I am joined today by our Chief Financial Officer, Jason Ruse, and our Chief Investment Officer, Patrick Schaefer. Following my opening remarks, Patrick will provide additional detail on our investment activity to date, and Jason will walk through the financials. To open, I'd like to remind shareholders that back in August, when we reported our second quarter results, we told you that the second quarter of 2022 was transformative for the company and that the fruits of our labor will begin to be evident in the performance of the company during the second half of 2022. Fast forward to today, I'm pleased to say that the company has reported its first quarter of positive NII under our stewardship, a significant milestone for the company. While Patrick will provide additional details on the portfolio, I would like to highlight that we believe Logan Ridge's portfolio is strong and substantially de-risked. have an increased diversity from 32 portfolio companies when we took managing the portfolio on July 1st, 2021 to 54 portfolio companies as of September 30th, 2022. Similarly, we've been averaging down our hold size from $7.2 million when we took over last July to $3.6 million as of September 30th, 2022, effectively having our average credit exposure to our portfolio companies. Further, with our new credit facility and our current leverage capacity, we believe we are well positioned to continue growing the portfolio and capitalize on opportunities arising from the current credit environment, which we believe will ultimately produce a very attractive vintage. Accordingly, over the coming quarters, we will remain laser focused on prudently growing the portfolio and increasing leverage such that we achieve our target leverage ratio of 1.3 times to 1.4 times, which will further increase our earnings power and improve our overall financial performance. As always, though, we are carefully monitoring the current economic environment, the impact of rising rates on our portfolio companies, and the broader credit market. To wrap up my prepared remarks, I would like to reiterate management's belief that we've successfully righted the ship and our top priority moving forward is increasing the company's profitability. With that in mind, we are cautiously optimistic that the company will be in a position to return to paying a quarterly dividend during the first quarter of 2023. With that, I will turn the call over to Patrick Schaefer, our Chief Investment Officer.

Patrick Schaefer Thanks, Ted. As of September 30, 2022, the fair value of our portfolio was approximately $193.1 million and consisted of 54 portfolio companies. First lien debt represented 61.2% and 61.9% of our total portfolio on a cost and fair value basis respectively. This compares to 54.4% and 49.6% of the company's total portfolio on a cost and fair value basis respectively as of December 31st, 2021. At quarter end, our debt portfolio, our debt investment portfolio represents 79.4% of the total portfolio at fair value and had a weighted average annualized yield of approximately 8.9 percent, excluding income from non-accruals and collateralized loan obligations, or 9.7 percent when excluding our debt securities on non-accrual from both the numerator and denominator. This compares to a debt portfolio which represented 75 percent of our total portfolio at fair value with a weighted average annualized yield of approximately 8.7 percent, excluding income from non-accruals and collateralized loan obligations. or 9% when excluding our debt securities on non-accrual from both the numerator and denominator at the end of the second quarter. Going forward, we would expect the rising rate environment to continue to benefit Logan Ridge at 76% of our assets, our floating rate, compared to only 41% of our liabilities. During the quarter, the company continued to judiciously redeploy capital generated from exiting the legacy portfolio. Specifically, the company made approximately $36.7 million of investments and had approximately $17.1 million in repayments and sales, resulting in net repayments and sales of approximately $19.6 million for the quarter. Thus, our investment portfolio as of September 30, 2022, consisted of investments in 54 portfolio companies with a fair value of approximately $193.1 million, or an average investment size of $3.6 million. Our non-yielding equity portfolio as of September 30, 2022, decreased to 17.6% and 17.0% of the portfolio on a cost and fair value basis, respectively. This compares to 21.7% and 21.4% of the portfolio on a cost and fair value basis as of the second quarter, and 27.1% and 32.6% of the portfolio on a cost and fair value basis as of December 31st, 2021, which marks a substantial improvement. Additionally, subsequent to the quarter end, we exited Burke American Auto Parts Group LLC at the September 30th fair value, further reducing our non-yielding equity portfolio to 15.6% of the portfolio on a fair value basis. During the quarter, we had no new non-accruals. Additionally, the company ended the quarter with $11.3 million in cash as well as $29.2 million of unused borrowing capacity available for deployment investments originated by the BC Partners credit platform. I'll now turn the call over to Jason.