Portman Ridge Finance Corporation

Welcome to Portman Ridge Finance Corporation's second quarter ended June 30th, 2025 earnings conference call. An earnings press release was distributed yesterday, August 7th, after market closed. 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 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 Goldthorpe, Chief Executive Officer, President and Director of Portman Ridge Finance Corporation. Brandon Satorin, 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 Portman Ridge. Please go ahead, Ted.

Good morning, and welcome to our second 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 performance and activities during the second 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. We continue to advance our strategic priorities in the second quarter, generating net investment income of $4.6 million, or 50 cents per share, compared with $4.3 million, or 47 cents per share, in the prior quarter. Our focus remains on maintaining a high quality portfolio and delivering long-term value to our shareholders. Additionally, the recent completion of our merger with Logan Ridge Finance Corporation marks a transformational milestone for the company. We are extremely proud to have completed this transaction and look forward to the greater scale, broader portfolio diversification, and enhanced financial flexibility it will provide. We believe the newly combined company will drive improved operating efficiency and shareholder returns over time. Logan Ridge also delivered strong results for the second quarter, generating net investment income of $1.2 million, or 47 cents per share, up from 0.9 million, or 35 cents per share, in the first quarter of 2025. The increase was driven by net deployment activity of $3.8 million during the quarter and continued credit strength with no new investments on non-accrual at quarter end. To better reflect this next chapter and the strength of our advisor, we will also be changing our corporate name to BCP Investment Corporation with the NASDAQ, ticker BCIC, in the following weeks. The new name highlights our affiliation with BC Partners, a global alternative investment platform with deep credit expertise, and reinforces our commitment to building an industry-leading business development company. For the second quarter of 2025, the Board of Directors approved a base distribution of 47 cents per share, as well as a supplemental cash distribution of 2 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 forward, we are excited about the opportunities ahead for the combined company. we will seek to leverage the company's enhanced scale, further diversified portfolio, cost savings due to overall operating expenses, and improve stock trading liquidity to deliver compelling risk-adjusted returns and drive long-term value for our shareholders. We remain confident in our strategy and experienced management team as we enter the back half of this year. With that being said, I will turn the call over to Patrick Schaefer, our Chief Investment Officer, for a review of our investment activity.

Thanks, Ted. Activity in our core markets was partially constrained for the quarter due to the initial tariff announcements and subsequent revisions to the various levels. Having said that, deal volume did pick up meaningfully towards the end of the quarter, and thus far during Q3, our pipeline and repayment activity has been fairly active. For the first time in a while, there appears to be a healthy mix of new LBO sale processes as well as refinancings, and the syndicated markets appear to be open for the very large end of the middle market. While this last dynamic has limited direct impact on our franchise, it does point to overall healthy capital markets that showed later groundwork for increased deal activity in the second half of the year. Turning now to slide six of our presentation and sensitivity of our earnings to interest rates. As of June 30th, 2025, approximately 86.9% 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, SOFR rates have slightly declined over the last few quarters, impacting current quarter net investment income. Skipping down to slide 11, originations for the second quarter were $10.9 million and repayment and sales were $17.0 million, resulting in net repayment and sales of approximately $6.1 million. Overall yield on par value of the new investments during the quarter was 11.5%. slightly above the yield of the overall portfolio at 10.7% on par value. Our investment portfolio at year-end remained highly diversified. We ended the second quarter with a debt investment portfolio, when excluding our investments in CLO funds, equities, and joint ventures, spread across 69 different portfolio companies and 25 different industries, with an average par balance of $2.6 million. Turning to slide 12, in aggregate, we had six investments on non-recrual status at the end of the second quarter of 2025, representing 2.1% and 4.8% of the company's investment portfolio at fair value and cost, respectively. It is worth noting that for a subset of the non-recrual population, the company started during Q2 to recognize interest income on a cash basis, i.e., only when cash payments are received. This compares to six investments on non-recrual status as of March 31, 2025, representing 2.6% and 4.7% of the company's investment portfolio at fair value and cost, respectively. On slide 13, excluding our non-accrual investments, we have an aggregate debt investment portfolio of $314.7 million at fair value, which represents a blended price of 86.6% at par value, and it's 88.6% comprised of first-in-loans at par value. Assuming a par recovery, our June 30, 2025 fair values reflect a potential of $24 million of incremental NAV value, or a 14.6% increase to NAV. When applying an illustrative 10% default rate and 70% recovery rate, our debt portfolio would generate an incremental $1.51 per share of NAV, or an 8.4% increase as it rotates. Finally, turning to slide 14, if you aggregate the last three acquired portfolios, we have purchased a combined $435 million of investments, and have realized approximately 88% of these positions at a combined realized and unrealized mark of 100% of fair value at the time of closing the respective merger. As of Q2 2025, we have fully exited the acquired Oak Hill portfolio and are down to a combined $20 million of the acquired HCAP and initial KCAP portfolios. I'll now turn the call over to Brandon to further discuss our financial results for the period.