Portman Ridge Finance Corporation

Welcome to Portman Ridge Finance Corporation's first quarter-ended March 31, 2025 earnings conference call. An earnings press release was distributed yesterday, May 8, 2025, after the close of the market. A copy of the release along with an earnings presentation is available on the company's website at www.portmanridge.com in the Investor Relations section and and should be reviewed in conjunction with the company's form 10-Q filed yesterday 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. Portman Ridge Finance Corporation assumes no obligation to update any such forward-looking statements unless required by law. Speaking on today's call will be Ted Gultorp, Chief Executive Officer, President, and Director of Portman Ridge Finance Corporation, Brandon Satoran, 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 Port Bentridge.

Good morning.

Welcome to our first quarter 2025 earnings call. I'm joined today by our Chief Financial Officer, Brandon Satorin, and our Chief Investment Officer, Patrick Schaefer. Following my opening remarks on the company's performance and activities during the first quarter, Patrick will provide commentary on our investment portfolio and our markets. And Brandon will discuss our operating results and financial condition in greater detail. During the first quarter, despite operating under unpredictable macroeconomic environment, we continue to execute our disciplined investment strategy, deploying approximately $17.5 million into strong defensively positioned opportunities in our pipeline. We also had $15.7 million of repayments and sales during the quarter resulting in our return to net deployers of capital. Additionally, we are enthusiastic about the strategic benefits the combination with Logan Ridge provides. This merger represents a meaningful step forward for the company with the potential to provide increased scale, improved liquidity, and greater operational efficiency, all key drivers in enhancing long-term shareholder value. We encourage all shareholders to attend the meeting and vote for the proposed merger as recommended by the board of directors of both companies. We're excited about the road ahead and look forward to sharing more updates soon. The first quarter, the Board of Directors approved a base distribution of 47 cents per share. Of note, earlier this year, we modified our dividend policy and introduced a stable base distribution of 47 cents per share, which is anticipated to be sustainable across market cycles. Looking ahead, the current macro economic backdrop shaped by shifting trade dynamics, inflation, and ever-evolving monetary policy continues to drive uncertainty in the market. These dynamics highlight the importance of taking a long-term approach grounded in disciplined credit selection and prudent risk management, and we view this period as an opportunity to further differentiate through thoughtful deployment and rigorous underwriting. I remain confident in our ability to drive the best outcome for shareholders and, most importantly, credit quality of the overall portfolio. Overall, we're excited about the opportunities ahead on the Portland side, in addition to the new opportunities that should arise following the proposed merger with Logan Bridge due to scale, expected synergies, and cost-savings benefits. We anticipate being active in the market, and with a healthy pipeline, fortified balance sheet, prudent investment strategy, and experienced management team, we remain confident in our ability to generate strong returns, risk-adjusted returns, and derive long-term value for our shareholders. With that, I will turn the call over to Patrick Schaefer, our Chief Investment Officer, for a review of our investment activity. Thanks, Ted. Turning now to slide five of our presentation, the sensitivity of our earnings to interest rates. As of March 31st, 2025, approximately 88.5% of our debt securities portfolio was based on a floating rate with a spread peg to an interest rate index such as SOFR or prime rate, with substantially all of these being linked to SOFR. As you can see from the chart, SOFA rates have slightly decreased over the last few quarters, impacting the current quarter net investment income. Skipping down to slide 10, originations for the quarter were higher than last quarter and above the current quarter repayment and sales levels, resulting in net deployment of approximately $1.8 million. Overall yield on par value of new investors during the quarter was 10.6%, slightly below the yield of the overall portfolio at 11.0% on par value. Our investment portfolio at year-end remained highly diversified. We ended the first quarter with a debt investment portfolio when excluding our investments in CLO funds, equities, and joint ventures spread across 24 different industries with an average par balance of $2.6 million. Turn to slide 11. In aggregate, we had six investments on non-recrual status at the end of the first quarter of 2025, representing 2.6 percent and 4.7 percent of the company's investment portfolio at fair and cost value, respectively. This compares to six investments on non-recrual status as of December 31st, 2024, representing 1.7 and 3.4 percent of the company's investment portfolio at fair value and cost, respectively. On slide 12, Excluding our non-recrual investments, we have an aggregate debt investment portfolio of $314.1 million at fair value, which represents a blended price of 90.5% on par value and is 91.1% comprised of personally loaned at par value. Two in a par recovery are March 31st, 2025 fair values, with a potential of $32.8 million of incremental net value, or an 18.3% increase to net. When applying an illustrative 10 percent default rate and 70 percent recovery rate, our debt portfolio would generate an incremental $2.43 per share of NAV, or a 12.5 percent increase as it rotates. Finally, referring to slide 13, if you aggregate the last three portfolios we have purchased, a combined $435 million in investments, and it realized approximately 86 percent of these investments at combined realized and unrealized marks of 101 percent fair value at the time of closing the respective mergers. As of Q1 2025, we've fully exited the acquired Oak Hill portfolio and are down to a combined $22 million of the acquired HCAP and initial KCAP portfolios. And I'll turn the call over to Brandon to further discuss our financial results for the period.