Logan Ridge Finance Corporation

Thank you. Good morning and welcome to Logan Ridge Finance Corporation's full year and fourth quarter ended December 31st, 2022 earnings conference call. An earnings press release was distributed earlier yesterday after the close of the market. A copy of the release along with a 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-K 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 statements as a result of a number of factors including those described in the company's filings with the SEC. Speaking on today's call will be Ted Goldthorpe, Chief Executive Officer, President and Director of Logan Ridge Finance Corporation, Jason Ruse, Chief Financial Officer, and Patrick Schaefer, Chief Investment Officer. With that, I would like to turn the call over to Ted Goldthorpe, Chief Executive Officer of Logan Ridge Finance Corporation. Please go ahead, Ted.

Good morning. and welcome to our full year and fourth quarter 2022 earnings call. As I 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. The fourth quarter marks another significant milestone for Logan Ridge, as the company is reinstating its quarterly dividend at 18 cents per share, and marks the second consecutive quarter of positive NII since Mount Logan Management took over its investment advisor just 18 months ago. Furthermore, the company's board of directors approved a $5 million share repurchase program, which will continue for one year. We believe our equity trades below fair value and a stock buyback plan is accretive to both our net asset value and net investment income per share. Although our window is short between our year-end results and our first quarter earnings period, we would look to capture that discount for our shareholders. We are very proud of what we achieved during 2022, which was a transformative year for the company and the first full fiscal year under Mount Logan's management stewardship. To open, I'd like to start by reminding you that last August when we reported our second quarter results, we said that management had made significant progress on the execution of our strategic priorities for Logan Ridge and that is the progress that would be evident in the company's financials during the second half of the year. Notably, we had just announced a successful refinancing of the entire legacy debt capital structure we inherited from the former advisor and successfully refinanced and recapitalized the company's legacy investment in Eastport Holdings where we generated substantial cash for deployment and exited the company's non-yielding equity interest in the portfolio company. Fast forward to today, the company has reported its second consecutive quarter of positive NII, with a fourth-quarter NII more than triple the prior quarter, which in turn led to the reintroduction of the quarterly dividend. Further, during the year, we took steps to reposition the company's investment portfolio, making substantial progress on our goal to rotate out of the non-income-producing legacy equity exposure. Specifically, the non-yielding equity portfolio represents just 16.3% and 14.2% of the company's total investments at cost and fair value, respectively, as of December 31st, 2022, compared to 27.2% and 32.6% as of the prior year. We've also reduced the number of non-accruals, significantly increased the portfolio's diversification, and grown the company's exposure to credits originated by the BC Partners credit platform. Most importantly, We achieved these results against the backdrop of particularly challenging and uncertain market conditions. Looking to the future, Logan Ridge is now well positioned to capitalize on opportunities arising from the current credit environment in 2023, which we believe will produce an attractive vintage of credit. Over the coming quarters, we will focus on maximizing the earnings power of the company's balance sheet and more efficient capital structure to further increase shareholder total returns. After a pivotal 2022, we enter 2023 optimistic and well-positioned to continue our work transforming the company into a more stable, higher-earning, and higher-dividend-paying BDC. With that, I will turn the call over to Patrick Schaefer, our Chief Investment Officer.

Thanks, Ted, and hello, everyone. As of December 31, 2022, the fair value of our portfolio was approximately $203.6 million and consisted of 59 portfolio companies. This compares to 54 portfolio companies with a fair value of approximately $193.1 million in the prior quarter and 40 portfolio companies with a fair value of approximately $198.2 million as of December 31st, 2021. In addition to substantially increasing our portfolio diversification as of December 31st, 2022, 55% of the company's investment portfolio at fair value was invested in assets originated by the BC Partners credit platform. As of December 31st, 2022, we have an aggregate debt securities fair value of $169.2 million, which represents a blended price of 93.8% of par value and is 81% comprised of first lien loans at par value. Assuming a par recovery, December 31, 2022 fair values reflect a potential of $11.1 million of incremental NAV value, or $4.12 per share. For lesser purposes, if you assume a 10% default rate and a 70% recovery rate on this debt portfolio, there would still be an incremental $2.13 per share of NAV over time as the portfolio matures and is repaid. During the fourth quarter, the company continued to judiciously redeploy capital generated from exiting the legacy portfolio. Specifically, the company made approximately $23.9 million of investments and had approximately $10.2 million in repayments and sales, resulting in net deployment of approximately $13.7 million for the quarter. At quarter end and year end, our debt investment portfolio represented 83% of the total portfolio at fair value, had a weighted average annualized yield of approximately 10.4%, excluding income from non-accruals and collateralized loan obligations. This compares to a debt investment portfolio, which represented 67% of the total portfolio at fair value, with a weighted average yield of approximately 8.1%, excluding income from non-accruals and collateralized loan obligations as of the prior year. Further, as of year end, First lien debt represented 64.9% and 67.3% of our total portfolio on a cost and fair value basis respectively. This compares to first lien debt representing 54.4% and 49.6% of our total portfolio on a cost and fair value basis respectively as of the prior year end, December 31st, 2021. Our non-yielding equity portfolio as of December 31st, 2022 has decreased to 16.3% and 14.2% of the portfolio on a cost and fair value basis, respectively. This compares to 27.2% and 32.6% of the portfolio on a cost and fair value basis as of December 31st, 2021, which marks a substantial improvement, which is evident in our fourth quarter net investment income. During the fourth quarter of 2022, we successfully exited our debt investment in Big Mouth Inc. for a realized gain of of approximately $100,000, which had been on non-accrual since Mount Logan took over the company's investment advisor. Accordingly, as of year end, only one debt investment remains on non-accrual with an aggregate amortized cost and fair value of $11.9 million and $9.7 million, respectively, or 5.4% and 4.8% of the investment portfolio at cost and fair value, respectively. And I'll turn the call over to Jason.