Logan Ridge Finance Corporation

Good morning and welcome to Logan Ridge Finance Corporation's fourth quarter and full year ended December 31, 2023 earnings conference call. An earnings press release was distributed yesterday after the close of the market. A company or 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 with the company's Form 10-K file 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, Brandon Sotorin, Chief Accounting 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.

Thank you and good morning. Welcome to our fourth quarter and full year 2023 earnings call. As I mentioned, I'm joined today by Brandon Satorin and our Chief Investment Officer, Patrick Schaefer. Following my opening remarks, Patrick will provide additional details on our investment activity to date, and Brandon will walk through the financials. I'd like to start by highlighting that 2023 was a record year for Logan Ridge, as we were able to reintroduce the quarterly dividend as well as record the highest level of annual investment income, net investment income, since we began managing the company in July of 2021. This success is largely a continuation of the performance trajectory Logan has been on since we reported our first quarter of positive net investment income for the quarter ended September 30th, 2022. As the company's exposure to the legacy equity portfolio has continued to decline and its exposure to credits originated by the BC Partners credit platform has increased, The benefit to shareholders has been clear and has been reflected through Logan's strong financial results. With that in mind, I will keep my prepared comments brief today and limit it to a few key highlights, with Patrick and Brandon providing more detail on shortly. First and foremost, as a result of the company's financial performance, the company's board directors approved a 7% increase to the company's quarterly distribution which brings it to 32 cents per share for the first quarter of 2024. This is the fourth consecutive quarterly distribution increase and represents a 77.8% increase from the 18 cent per share distribution we declared when we turned the quarterly dividend on just one year ago. Our net investment income for the year ended December 31st, 2023 was 3.8 million or $1.43 per share, which represents an increase of $5 million compared to net investment loss of 1.2 million or 43 cents per share for the year ended December 31st, 2022. This result underscores the enhanced earnings power of our portfolio and the success we've had monetizing the non-yielding legacy portfolio and redeploying that capital into income generating names originated by the BC Partners credit platform. The company ended the year with undistributed spillover income of $2.6 million, or $0.97 per share, which should fortify the company's quarterly distribution. Finally, the company's board of directors approved a new share repurchase program with similar terms as the current share repurchase program that was established in March of 2023. Since the inception of the program through year end, the company has repurchased approximately 37,000 shares, which is accretive to NAV by approximately $0.18 per share since the introduction of the program. After a strong 2023, we enter 2024 cautiously optimistic. Given the increase in M&A activity and more broadly the increase in private credit deal activity as a whole, our pipeline remains robust and we continue to see attractive investment opportunities in the market. As throughout 2023, the BC Partners credit platform remains well equipped to take advantage of the current market conditions and we continue to prudently deploy capital into new borrowers. With that, I will turn the call over to Patrick Schaefer, our Chief Investment Officer.

Patrick Schaefer Thanks, Ted, and hello, everyone. As of December 31st, 2023, the fair value of Logan's portfolio was approximately $189.7 million with exposure to 60 portfolio companies. This compares to 58 portfolio companies with a fair value of approximately $187.1 million in the prior quarter and 59 portfolio companies with a fair value of $203.6 million in the same period a year ago. During the quarter ended December 31, 2023, we continued to deploy capital despite the lower deal activity as a whole during the year. Specifically, the company made approximately $14.8 million in new investments and had approximately $9.2 million in repayments and sales, resulting in net deployment of approximately $5.6 million for the quarter. While we continue to be prudent and disciplined underwriters, we believe 2022 and 2023 will prove to be particularly attractive vintages. Now on to our portfolio composition. As Ted previously noted, 58% of the company's investment portfolio at fair value was invested in assets originated by the BC Partners credit platform. As of December 31, 2023, our debt investment portfolio represented 82% of the total portfolio at fair value and a weighted average annualized yield of approximately 11.1% excluding income from non-accruals and collateralized loan obligations. This compares to a debt investment portfolio, which represented 82.0% of our portfolio at fair value and a weighted average annualized yield of approximately 11.0%, excluding income from non-accruals and collateralized loan obligations as of the prior quarter, and 83.2% with a weighted average annualized yield of approximately 10.4% as of the same period for the prior year. The weighted average annualized yield, excluding income from non-accruals and collateralized loan obligations, increased by 10 basis points and 70 basis points compared to the prior quarter and prior year, respectively. As of December 31, 2023, 86.4% of our debt investment portfolio at fair value was bearing interest at a floating rate compared to 82.3% as of September 30, 2023. and 82.8% as of December 31st, 2022. As of December 31st, 2023, first lien debt represented 65.4% of our total portfolio on both a cost and fair value basis. This compares to first lien debt representing 63.6% and 64.8% of our total portfolio on a cost and fair value basis, respectively, as of September 30th, 2023, and 64.8% 0.9% and 67.3% of our total portfolio on a cost and fair value basis respectively as of December 31st, 2022. The non-yielding equity portfolio represented 15.5% and 17.0% of the portfolio on a cost and fair value basis respectively as of December 31st, 2023. This compares to 17.6% and 16.6% of the portfolio on a cost and fair value basis as of September 30, 2023. Moving on to non-accrual status, during the quarter, there is one new portfolio company added to non-accrual status. Accordingly, as of December 31, 2023, the company had three portfolio companies on non-accrual status with an aggregate amortized cost and fair value of $17.2 million and $12.8 million, respectively, or 8.7% and 6.8% of the investment portfolio at cost and fair value, respectively. This compares to two portfolio companies on non-accrual status as of the prior quarter, with a cost and fair value of $16.8 million and $10.6 million, respectively, or 8.3% and 5.7% of the investment portfolio's cost and fair value, respectively. And I'll turn the call over to Brandon.