Portman Ridge Finance Corporation (Nasdaq: PTMN) (the “Company” or
“Portman Ridge”) announced today its financial results for the
fourth quarter and full year ended December 31, 2023.
Full Year 2023 Milestones
- Total investment
income was $76.3 million, an increase of 9.6% as compared
to full year 2022.
- Net investment income
("NII") was $34.8 million ($3.66 per share).
- Core investment
income, excluding the impact of purchase price accounting,
was $74.5 million, an increase of 16.1% as compared to full year
2022.
- Total shares
repurchased in open market transactions under the Renewed
Stock Repurchase Program during the year ended December 31, 2023,
were 224,933 at an aggregate cost of approximately $4.4 million.
This compares to 167,017 shares repurchased during the year ended
December 31, 2022 at an aggregate cost of approximately $3.8
million.
- Total stockholder
distributions for 2023 amount to $2.75 per share.
Fourth Quarter 2023 Highlights
- Total investment
income for the fourth quarter of 2023 was $17.8 million, a
decrease of $0.8 million as compared to $18.6 million for the
fourth quarter of 2022 and a decrease of $0.8 million as compared
to $18.6 million for the third quarter of 2023.
- Core investment
income1, excluding the impact of purchase
price accounting, for the fourth quarter of 2023 was $17.7 million,
unchanged from the fourth quarter of 2022 and a decrease of $0.6
million as compared to $18.3 million for the third quarter of
2023.
- Net investment income
("NII") for the fourth quarter of 2023 was $11.2 million
($1.19 per share), an increase of $4.1 million as compared to $7.1
million ($0.74 per share) for the fourth quarter of 2022 and an
increase of $4.0 million as compared to $7.2 million ($0.75 per
share) for the third quarter of 2023. The increase in NII in the
fourth quarter of 2023 was the result of a one-time expense
reimbursement from the Company’s investment adviser.
- Net asset value
(“NAV”) as of December 31, 2023, was $213.5 million
($22.76 per share). This compares to NAV of $214.8 million ($22.65
per share) for the third quarter of 2023. The increase in NAV per
share, despite a decrease in total NAV, was due to the accretive
nature of the share repurchase program to NAV per share.
- Total shares
repurchased in open market transactions under the Renewed
Stock Repurchase Program during the quarter ended December 31,
2023, were 101,680 shares at an aggregate cost of approximately
$1.8 million.
Subsequent Events
- Declared stockholder
distribution of $0.69 per
share for the first quarter of 2024, payable on April 2,
2024 to stockholders of record at the close of business on March
25, 2023. This represents a $0.01 per share increase from the first
quarter of 2023.
- On March 11, 2024, the Company’s
board of directors authorized a renewed stock repurchase program of
up to $10 million for an approximately one-year period, effective
March 11, 2024 and terminating on March 31, 2025. The renewed stock
repurchase program has substantially the same terms as the prior
program.
Management Commentary
Ted Goldthorpe, Chief Executive Officer of Portman
Ridge, stated, “We are pleased to announce another strong
year of financial performance for Portman Ridge, as we saw a 9.6%
increase in total investment income and a 16.1% increase in core
investment income as compared to the previous year. These
milestones are a testament to the continued positive momentum we
are seeing across our platform, despite operating under difficult
market conditions.
Additionally, we believe that our stock remained
undervalued throughout the year, thus, during 2023 we repurchased
shares for an aggregate of $4.4 million, which had an accretive
effect to the company’s net asset value per share, reinforcing our
commitment to shareholder value. On March 11, 2024, our board of
directors authorized a renewed stock repurchase program of up to
$10 million for an approximately one-year period. As a result of
our strong financial performance during the year, the board of
directors was able to approve a dividend of $0.69 per share for the
first quarter of 2024, an increase of $0.01 per share as compared
to the first quarter of 2023. As we step forward into 2024, we
believe we have a robust pipeline, and are favorably positioned to
take advantage of new investment opportunities that arise, while
continuing to be highly selective in our investment and capital
deployment process. We remain confident in our strategy and believe
it will allow us to continue to deliver strong results and returns
for our shareholders.”
Selected Financial Highlights for Full Year
2023
- Total investment
income for the year ended 2023 was $76.3 million, of which
$63.5 million was attributable to interest income from the Debt
Securities Portfolio. This compares to total investment income of
$69.6 million for the year ended 2022, of which $55.8 million was
attributable to interest income from the Debt Securities
Portfolio.
- Core investment
income for the full year 2023, excluding the impact of
purchase price accounting, was $74.5 million, an increase of $10.3
million as compared to core investment income of $64.2 million for
full year 2022.
- Net investment income
("NII") for full year 2023 was $34.8 million ($3.66 per
share) as compared to $28.9 million ($3.00 per share) for the full
year 2022. The year-over-year increase was largely due to the $5.3
million expense reimbursement from the Company’s investment adviser
in the fourth quarter.
- Net asset value
(“NAV”) as of December 31, 2023, was $213.5 million
($22.76 per share), an increase of $0.11 per share as compared to
$214.8 million ($22.65 per share) for the third quarter of 2023.
This compares to $232.1 million ($24.23 per share) as of December
31, 2022. The quarter-over-quarter increase in NAV per share,
despite total NAV decreasing slightly, was predominantly driven by
the repurchase of 101,680 shares during the fourth quarter.
- Non-accruals on debt
investments, as of December 31, 2023, were seven debt
investments representing 1.3% and 3.2% of the Company’s investment
portfolio at fair value and amortized cost, respectively. This
compares to eight debt investments representing 1.6% and 3.6% of
the Company’s investment portfolio at fair value and amortized
cost, respectively, as of September 30, 2023, and four debt
investments representing 0.0% and 0.6% of the Company’s investment
portfolio at fair value and amortized cost, respectively, as of
December 31, 2022.
- Total investments at fair
value as of December 31, 2023, was $467.9 million; when
excluding CLO funds, Joint Ventures, and short-term investments,
these investments are spread across 27 different industries and 100
different entities with an average par balance per entity of
approximately $3.1 million. This compares to $576.5 million of
total investments at fair value as of December 31, 2022, comprised
of investments in 31 different industries and 119 different
entities, with an average par balance per entity of approximately
$3.3 million.
- Weighted average
contractual interest rate on our interest earning Debt
Securities Portfolio as of December 31, 2023 was approximately
12.5%.
- Par value of outstanding
borrowings, as of December 31, 2023, was $325.7 million
with an asset coverage ratio of total assets to total borrowings of
165%. On a net basis, leverage as of December 31, 2023 was 1.19x2
compared to net leverage of 1.49x3 as of December 31, 2022.
Other Updates
The Company is pleased to announce that Brandon
Satoren has been appointed by the Company’s board of directors as
the new Chief Financial Officer, Secretary and Treasurer of the
Company, effective April 1, 2024. Mr. Satoren, 35, currently serves
as the Chief Accounting Officer of Logan Ridge Finance Corporation
as well as other registered investment companies within the broader
BC Partners Credit platform and has over 14 years of experience in
the asset management industry. Mr. Satoren joined BC Partners
Advisors LP, an affiliate of the Company’s investment adviser, in
May 2021 as a member of the Credit Control team. In this role, he
is responsible for directing accounting policy, execution and
oversight of financial and non-financial reporting process, as well
as other various finance, operations, governance and compliance
responsibilities for BC Partners’ credit strategies. Prior to
joining BC Partners Advisors LP, Mr. Satoren previously was a Vice
President and Controller at PennantPark, a Vice President at AQR
Capital Management, LLC and a Manager at PricewaterhouseCoopers
LLP. He earned a Bachelor of Science in Accounting from the
University of Central Florida in 2010. Mr. Satoren is a Certified
Public Accountant licensed to practice in Colorado and is a member
of the American Institute of Certified Public Accountants.
On March 11, 2024, the board of directors of
Portman Ridge received and accepted the resignation of Jason Roos,
Chief Financial Officer, Secretary and Treasurer of the Company,
effective April 1, 2024. Mr. Roos’ decision to resign is not
related to any disagreement relating to the Company’s accounting,
strategy, management, operations, policies, regulatory matters, or
practices (financial or otherwise). Mr. Roos will continue to
support the executive team in an advisory capacity for an extended
period of time.
Results of Operations
Operating results for the years ended December
31, 2023, and December 31, 2022, were as follows:
|
|
|
For the Year Ended December 31, |
|
|
|
|
2023 |
|
|
2022 |
|
Total investment income |
|
|
$ |
76,315 |
|
|
$ |
69,614 |
|
Net expenses(1) |
|
|
|
41,542 |
|
|
|
40,724 |
|
Net Investment
Income |
|
|
|
34,773 |
|
|
|
28,890 |
|
Net realized gain (loss) on investments |
|
|
|
(26,766 |
) |
|
|
(31,185 |
) |
Net unrealized gain (loss) on investments |
|
|
|
3,322 |
|
|
|
(17,915 |
) |
Tax (provision) benefit on realized and unrealized gains (losses)
on investments |
|
|
$ |
414 |
|
|
$ |
(786 |
) |
Net realized and unrealized appreciation (depreciation) on
investments, net of taxes |
|
|
$ |
(23,030 |
) |
|
$ |
(49,886 |
) |
Realized gains (losses) on extinguishments of debt |
|
|
$ |
(362 |
) |
|
$ |
- |
|
Net Increase
(Decrease) in Net Assets Resulting from Operations |
|
|
$ |
11,381 |
|
|
$ |
(20,996 |
) |
Net Increase (Decrease) In Net Assets Resulting from Operations per
Common Share: |
|
|
|
|
|
|
|
Basic and Diluted: |
|
|
$ |
1.20 |
|
|
$ |
(2.18 |
) |
Net Investment Income Per Common Share: |
|
|
|
|
|
|
|
Basic and Diluted: |
|
|
$ |
3.66 |
|
|
$ |
3.00 |
|
Weighted Average Shares of
Common Stock Outstanding—Basic and Diluted |
|
|
|
9,509,396 |
|
|
|
9,634,468 |
|
1During the year ended December 31, 2023, the Company received a
reimbursement from its investment adviser of $5.3 million,
inclusive of interest, for expenses relating to certain
administrative transition services.
Investment Income
The composition of our investment income for the
years ended December 31, 2023, and 2022 was as follows:
|
|
For the Year Ended December 31, |
($ in
thousands) |
|
2023 |
|
|
2022 |
|
Interest from investments in debt excluding accretion |
|
$ |
54,631 |
|
|
$ |
44,771 |
|
Purchase discount accounting |
|
|
1,774 |
|
|
|
5,425 |
|
PIK Investment Income |
|
|
7,068 |
|
|
|
5,608 |
|
CLO Income |
|
|
1,998 |
|
|
|
4,044 |
|
JV Income |
|
|
8,948 |
|
|
|
8,591 |
|
Service Fees |
|
|
1,896 |
|
|
|
1,175 |
|
Investment Income |
|
$ |
76,315 |
|
|
$ |
69,614 |
|
Less : Purchase discount accounting |
|
$ |
(1,774 |
) |
|
$ |
(5,425 |
) |
Core Investment Income |
|
$ |
74,541 |
|
|
$ |
64,189 |
|
|
Fair Value of Investments
The composition of our investment portfolio as
of December 31, 2023 and December 31, 2022 at cost and fair value
was as follows:
|
|
|
|
|
|
|
($ in
thousands) |
|
December 31, 2023 |
|
|
December 31, 2022 |
|
Security
Type |
|
Cost/AmortizedCost |
|
|
Fair Value |
|
|
%(1) |
|
|
Cost/AmortizedCost |
|
|
Fair Value |
|
|
%(1) |
|
Senior Secured Loan |
|
$ |
356,358 |
|
|
$ |
340,159 |
|
|
|
73 |
|
|
$ |
435,856 |
|
|
$ |
418,722 |
|
|
|
73 |
|
Junior Secured Loan |
|
|
53,888 |
|
|
|
38,875 |
|
|
|
8 |
|
|
|
65,776 |
|
|
|
56,400 |
|
|
|
10 |
|
Senior Unsecured Bond |
|
|
416 |
|
|
|
43 |
|
|
|
0 |
|
|
|
416 |
|
|
|
43 |
|
|
|
0 |
|
Equity Securities |
|
|
31,280 |
|
|
|
20,533 |
|
|
|
4 |
|
|
|
28,848 |
|
|
|
21,905 |
|
|
|
4 |
|
CLO Fund Securities |
|
|
9,103 |
|
|
|
8,968 |
|
|
|
2 |
|
|
|
34,649 |
|
|
|
20,453 |
|
|
|
3 |
|
Asset Manager
Affiliates(2) |
|
|
17,791 |
|
|
|
- |
|
|
|
- |
|
|
|
17,791 |
|
|
|
- |
|
|
|
- |
|
Joint Ventures |
|
|
71,415 |
|
|
|
59,287 |
|
|
|
13 |
|
|
|
68,850 |
|
|
|
58,955 |
|
|
|
10 |
|
Derivatives |
|
|
31 |
|
|
|
- |
|
|
|
- |
|
|
|
31 |
|
|
|
- |
|
|
|
- |
|
Total |
|
$ |
540,282 |
|
|
$ |
467,865 |
|
|
|
100 |
% |
|
$ |
652,217 |
|
|
$ |
576,478 |
|
|
|
100 |
% |
1 Represents percentage of total portfolio at fair value2
Represents the equity investment in the Asset Manager
Affiliates
Liquidity and Capital
ResourcesAs of December 31, 2023, the Company had $325.7
million (par value) of borrowings outstanding at a current weighted
average interest rate of 7.0%, of which $108.0 million par value
had a fixed rate and $217.7 million par value had a floating rate.
This balance was comprised of $92.0 million of outstanding
borrowings under the Senior Secured Revolving Credit Facility,
$125.7 million of 2018-2 Secured Notes due 2029, and $108.0 million
of 4.875% Notes due 2026.
As of December 31, 2023 and December 31, 2022, the fair value of
investments and cash were as follows:
($ in
thousands) |
|
|
|
Security
Type |
|
December 31, 2023 |
|
|
December 31, 2022 |
|
Cash and cash equivalents |
|
$ |
26,912 |
|
|
$ |
5,148 |
|
Restricted Cash |
|
|
44,652 |
|
|
|
27,983 |
|
Senior Secured Loan |
|
|
340,159 |
|
|
|
418,722 |
|
Junior Secured Loan |
|
|
38,875 |
|
|
|
56,400 |
|
Senior Unsecured Bond |
|
|
43 |
|
|
|
43 |
|
Equity Securities |
|
|
20,533 |
|
|
|
21,905 |
|
CLO Fund Securities |
|
|
8,968 |
|
|
|
20,453 |
|
Asset Manager Affiliates |
|
|
- |
|
|
|
- |
|
Joint Ventures |
|
|
59,287 |
|
|
|
58,955 |
|
Derivatives |
|
|
- |
|
|
|
- |
|
Total |
|
$ |
539,429 |
|
|
$ |
609,609 |
|
|
As of December 31, 2023, the Company had
unrestricted cash of $26.9 million and restricted cash of $44.7
million. This compares to unrestricted cash of $14.9 million and
restricted cash of $18.8 million as of September 30, 2023, and
unrestricted cash of $5.1 million and restricted cash of $28.0
million as of December 31, 2022. As of December 31, 2023, the
Company had $23 million of available borrowing capacity under the
Senior Secured Revolving Credit Facility, and no remaining
borrowing capacity under the 2018-2 Secured Notes.
Interest Rate Risk
The Company’s investment income is affected by
fluctuations in various interest rates, including SOFR and prime
rates.
As of December 31, 2023, approximately 89.7% of
our Debt Securities Portfolio at par value were either floating
rate with a spread to an interest rate index such as SOFR or the
PRIME rate. 77.4% of these floating rate loans contain SOFR floors
ranging between 0.50% and 2.50%. We generally expect that future
portfolio investments will predominately be floating rate
investments.
In periods of rising or lowering interest rates,
the cost of the portion of debt associated with the 4.875% Notes
Due 2026 would remain the same, given that this debt is at a fixed
rate, while the interest rate on borrowings under the Revolving
Credit Facility would fluctuate with changes in interest rates.
Generally, the Company would expect that an
increase in the base rate index for floating rate investment assets
would increase gross investment income and a decrease in the base
rate index for such assets would decrease gross investment income
(in either case, such increase/decrease may be limited by interest
rate floors/minimums for certain investment assets).
|
|
Impact on net investment income froma
change in interest rates at: |
|
($ in
thousands) |
|
1% |
|
|
2% |
|
|
3% |
|
Increase in interest rate |
|
$ |
1,508 |
|
|
$ |
3,017 |
|
|
$ |
4,525 |
|
Decrease
in interest rate |
|
$ |
(1,508 |
) |
|
$ |
(3,017 |
) |
|
$ |
(4,525 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Conference Call and Webcast
We will hold a conference call on March 14,
2024, at 9:00 am Eastern Time to discuss our fourth quarter and
full year 2023 financial results. To access the call, stockholders,
prospective stockholders and analysts should dial (646) 307-1963
approximately 10 minutes prior to the start of the conference call
and use the conference ID 4194885.
A live audio webcast of the conference call can
be accessed via the Internet, on a listen-only basis on the
Company’s website www.portmanridge.com in the Investor Relations
section under Events and Presentations. The webcast can also be
accessed by clicking the following link:
https://edge.media-server.com/mmc/p/z9pgs7ne. The online archive of
the webcast will be available on the Company’s website shortly
after the call.
About Portman Ridge Finance
Corporation
Portman Ridge Finance Corporation (Nasdaq: PTMN)
is a publicly traded, externally managed investment company that
has elected to be regulated as a business development company under
the Investment Company Act of 1940. Portman Ridge’s middle market
investment business originates, structures, finances and manages a
portfolio of term loans, mezzanine investments and selected equity
securities in middle market companies. Portman Ridge’s investment
activities are managed by its investment adviser, Sierra Crest
Investment Management LLC, an affiliate of BC Partners Advisors,
LP.
Portman Ridge’s filings with the Securities and
Exchange Commission (the “SEC”), earnings releases, press releases
and other financial, operational and governance information are
available on the Company's website at www.portmanridge.com.
About BC Partners Advisors L.P. and BC
Partners Credit
BC Partners is a leading international
investment firm with over €40 billion of assets under management in
private equity, private credit and real estate strategies.
Established in 1986, BC Partners has played an active role in
developing the European buyout market for three decades. Today, BC
Partners executives operate across markets as an integrated team
through the firm's offices in North America and Europe. For more
information, please visit https://www.bcpartners.com/.
BC Partners Credit was launched in February 2017
and has pursued a strategy focused on identifying attractive credit
opportunities in any market environment and across sectors,
leveraging the deal sourcing and infrastructure made available from
BC Partners.
Cautionary Statement Regarding
Forward-Looking Statements
This press release contains forward-looking
statements. The matters discussed in this press release, as well as
in future oral and written statements by management of Portman
Ridge Finance Corporation, that are forward-looking statements are
based on current management expectations that involve substantial
risks and uncertainties which could cause actual results to differ
materially from the results expressed in, or implied by, these
forward-looking statements.
Forward-looking statements relate to future
events or our future financial performance and include, but are not
limited to, projected financial performance, expected development
of the business, plans and expectations about future investments
and the future liquidity of the Company. We generally identify
forward-looking statements by terminology such as “may,” “will,”
“should,” “expects,” “plans,” “anticipates,” “could,” “intends,”
“target,” “projects,” “outlook”, “contemplates,” “believes,”
“estimates,” “predicts,” “potential” or “continue” or the negative
of these terms or other similar words. Forward-looking statements
are based upon current plans, estimates and expectations that are
subject to risks, uncertainties, and assumptions. Should one or
more of these risks or uncertainties materialize, or should
underlying assumptions prove to be incorrect, actual results may
vary materially from those indicated or anticipated by such
forward-looking statements.
Important assumptions include our ability to
originate new investments, and achieve certain margins and levels
of profitability, the availability of additional capital, and the
ability to maintain certain debt to asset ratios. In light of these
and other uncertainties, the inclusion of a projection or
forward-looking statement in this press release should not be
regarded as a representation that such plans, estimates,
expectations or objectives will be achieved. Important factors that
could cause actual results to differ materially from such plans,
estimates or expectations include, among others,
(1) uncertainty of the expected financial performance of the
Company; (2) expected synergies and savings associated with merger
transactions effectuated by the Company; (3) the ability of the
Company and/or its adviser to implement its business strategy;
(4) evolving legal, regulatory and tax regimes;
(5) changes in general economic and/or industry specific
conditions, including but not limited to the impact of inflation;
(6) the impact of increased competition; (7) business
prospects and the prospects of the Company’s portfolio companies;
(8) contractual arrangements with third parties; (9) any
future financings by the Company; (10) the ability of Sierra
Crest Investment Management LLC to attract and retain highly
talented professionals; (11) the Company’s ability to fund any
unfunded commitments; (12) any future distributions by the
Company; (13) changes in regional or national economic conditions,
including but not limited to the impact of the COVID-19 pandemic,
and their impact on the industries in which we invest; and (14)
other changes in the conditions of the industries in which we
invest and other factors enumerated in our filings with the SEC.
The forward-looking statements should be read in conjunction with
the risks and uncertainties discussed in the Company’s filings with
the SEC, including the Company’s most recent Form 10-K and other
SEC filings. We do not undertake to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required to be reported under
the rules and regulations of the SEC.
Contacts:Portman Ridge Finance
Corporation
650 Madison Avenue, 23rd floorNew York, NY
10022info@portmanridge.com
Jason Roos Jason.Roos@bcpartners.com(212)
891-2880
The Equity Group Inc.Lena
Catilcati@equityny.com(212) 836-9611
Val Ferrarovferraro@equityny.com(212)
836-9633
PORTMAN RIDGE FINANCE
CORPORATIONCONSOLIDATED BALANCE
SHEETS(in thousands, except share
and per share amounts) |
|
|
December 31, 2023 |
|
|
December 31, 2022 |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
Investments at fair
value: |
|
|
|
|
|
Non-controlled/non-affiliated investments (amortized cost: 2023 -
$426,630; 2022 - $518,699) |
$ |
398,325 |
|
|
$ |
483,698 |
|
Non-controlled affiliated investments (amortized cost: 2023 -
$55,611; 2022 - $75,196) |
|
55,222 |
|
|
|
73,827 |
|
Controlled affiliated investments (cost: 2023 - $58,041; 2022 -
$58,322) |
|
14,318 |
|
|
|
18,953 |
|
Total Investments at Fair
Value (cost: 2023 - $540,282; 2022 - $652,217) |
$ |
467,865 |
|
|
$ |
576,478 |
|
Cash and cash equivalents |
|
26,912 |
|
|
|
5,148 |
|
Restricted cash |
|
44,652 |
|
|
|
27,983 |
|
Interest receivable |
|
5,162 |
|
|
|
4,828 |
|
Receivable for unsettled
trades |
|
573 |
|
|
|
1,395 |
|
Due from affiliates |
|
1,534 |
|
|
|
930 |
|
Other assets |
|
2,541 |
|
|
|
2,724 |
|
Total
Assets |
$ |
549,239 |
|
|
$ |
619,486 |
|
LIABILITIES |
|
|
|
|
|
2018-2 Secured Notes (net of
discount of: 2023 - $712; 2022 - $1,226) |
$ |
124,971 |
|
|
$ |
176,937 |
|
4.875% Notes Due 2026 (net of
discount of: 2023 - $1,225; 2022 - $1,704; net of deferred
financing costs of: 2023 - $561; 2022 - $818) |
|
106,214 |
|
|
|
105,478 |
|
Great Lakes Portman Ridge
Funding LLC Revolving Credit Facility (net of deferred financing
costs of: 2023 - $775; 2022 - $1,107) |
|
91,225 |
|
|
|
90,893 |
|
Payable for unsettled
trades |
|
520 |
|
|
|
1,276 |
|
Accounts payable, accrued
expenses and other liabilities |
|
4,252 |
|
|
|
4,614 |
|
Accrued interest payable |
|
3,928 |
|
|
|
3,722 |
|
Due to affiliates |
|
458 |
|
|
|
900 |
|
Management and incentive fees
payable |
|
4,153 |
|
|
|
3,543 |
|
Total
Liabilities |
$ |
335,721 |
|
|
$ |
387,363 |
|
COMMITMENTS AND
CONTINGENCIES (NOTE 8) |
|
|
|
|
|
NET
ASSETS |
|
|
|
|
|
Common stock, par value $0.01
per share, 20,000,000 common shares authorized; 9,943,385 issued,
and 9,383,132 outstanding at December 31, 2023, and 9,916,856
issued, and 9,581,536 outstanding at December 31, 2022 |
$ |
94 |
|
|
$ |
96 |
|
Capital in excess of par
value |
|
717,835 |
|
|
|
736,784 |
|
Total distributable (loss)
earnings |
|
(504,411 |
) |
|
|
(504,757 |
) |
Total Net
Assets |
$ |
213,518 |
|
|
$ |
232,123 |
|
Total Liabilities and
Net Assets |
$ |
549,239 |
|
|
$ |
619,486 |
|
Net Asset Value Per Common
Share |
$ |
22.76 |
|
|
$ |
24.23 |
|
PORTMAN RIDGE FINANCE
CORPORATIONCONSOLIDATED STATEMENTS OF
OPERATIONS(in thousands, except
share and per share amounts) |
|
|
|
For the Year Ended December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2021 |
|
INVESTMENT
INCOME |
|
|
|
|
|
|
|
|
|
Interest income: |
|
|
|
|
|
|
|
|
|
Non-controlled/non-affiliated investments |
|
$ |
55,675 |
|
|
$ |
51,090 |
|
|
$ |
60,236 |
|
Non-controlled affiliated investments |
|
|
2,728 |
|
|
|
3,150 |
|
|
|
4,775 |
|
Total interest income |
|
$ |
58,403 |
|
|
$ |
54,240 |
|
|
$ |
65,011 |
|
Payment-in-kind income: |
|
|
|
|
|
|
|
|
|
Non-controlled/non-affiliated investments (2) |
|
$ |
6,662 |
|
|
$ |
4,950 |
|
|
$ |
3,355 |
|
Non-controlled affiliated investments |
|
|
406 |
|
|
|
477 |
|
|
|
166 |
|
Controlled affiliated investments |
|
|
- |
|
|
|
181 |
|
|
|
- |
|
Total payment-in-kind income |
|
$ |
7,068 |
|
|
$ |
5,608 |
|
|
$ |
3,521 |
|
Dividend income: |
|
|
|
|
|
|
|
|
|
Non-controlled affiliated investments |
|
$ |
6,764 |
|
|
$ |
4,450 |
|
|
$ |
4,006 |
|
Controlled affiliated investments |
|
|
2,184 |
|
|
|
4,141 |
|
|
|
5,170 |
|
Total dividend income |
|
$ |
8,948 |
|
|
$ |
8,591 |
|
|
$ |
9,176 |
|
Fees and other income: |
|
|
|
|
|
|
|
|
|
Non-controlled/non-affiliated investments |
|
$ |
1,882 |
|
|
$ |
1,135 |
|
|
$ |
2,378 |
|
Non-controlled affiliated investments |
|
|
14 |
|
|
|
40 |
|
|
|
- |
|
Total fees and other income |
|
$ |
1,896 |
|
|
$ |
1,175 |
|
|
$ |
2,378 |
|
Total investment income |
|
$ |
76,315 |
|
|
$ |
69,614 |
|
|
$ |
80,086 |
|
EXPENSES |
|
|
|
|
|
|
|
|
|
Management fees |
|
$ |
7,452 |
|
|
$ |
8,349 |
|
|
$ |
7,916 |
|
Performance-based incentive fees |
|
|
7,374 |
|
|
|
6,126 |
|
|
|
7,075 |
|
Interest and amortization of debt issuance costs |
|
|
25,306 |
|
|
|
17,701 |
|
|
|
13,644 |
|
Professional fees |
|
|
2,629 |
|
|
|
3,400 |
|
|
|
3,660 |
|
Administrative services expense |
|
|
2,377 |
|
|
|
3,364 |
|
|
|
3,219 |
|
Other general and administrative expenses |
|
|
1,713 |
|
|
|
1,784 |
|
|
|
2,568 |
|
Total expenses |
|
$ |
46,851 |
|
|
$ |
40,724 |
|
|
$ |
38,082 |
|
Expense reimbursement |
|
$ |
(5,309 |
) |
|
$ |
- |
|
|
$ |
- |
|
Net expenses |
|
$ |
41,542 |
|
|
$ |
40,724 |
|
|
$ |
38,082 |
|
NET INVESTMENT
INCOME |
|
$ |
34,773 |
|
|
$ |
28,890 |
|
|
$ |
42,004 |
|
REALIZED AND
UNREALIZED GAINS (LOSSES) ON INVESTMENTS: |
|
|
|
|
|
|
|
|
|
Net realized gains (losses)
from investment transactions |
|
|
|
|
|
|
|
|
|
Non-controlled/non-affiliated investments |
|
$ |
(26,334 |
) |
|
$ |
(28,893 |
) |
|
$ |
(4,397 |
) |
Non-controlled affiliated investments |
|
|
(399 |
) |
|
|
(197 |
) |
|
|
139 |
|
Controlled affiliated investments |
|
|
(33 |
) |
|
|
- |
|
|
|
— |
|
Derivatives |
|
|
- |
|
|
|
(2,095 |
) |
|
|
- |
|
Net realized gain (loss) on investments |
|
$ |
(26,766 |
) |
|
$ |
(31,185 |
) |
|
$ |
(4,258 |
) |
Net change in unrealized
appreciation (depreciation) on: |
|
|
|
|
|
|
|
|
|
Non-controlled/non-affiliated investments |
|
$ |
6,696 |
|
|
$ |
(8,298 |
) |
|
$ |
(8,047 |
) |
Non-controlled affiliated investments |
|
|
980 |
|
|
|
(1,428 |
) |
|
|
282 |
|
Controlled affiliated investments |
|
|
(4,354 |
) |
|
|
(10,601 |
) |
|
|
625 |
|
Derivatives |
|
|
- |
|
|
|
2,412 |
|
|
|
(1,303 |
) |
Net unrealized gain (loss) on investments |
|
$ |
3,322 |
|
|
$ |
(17,915 |
) |
|
$ |
(8,443 |
) |
Tax (provision) benefit on
realized and unrealized (gains) losses on investments |
|
$ |
414 |
|
|
$ |
(786 |
) |
|
$ |
(1,442 |
) |
Net realized and unrealized appreciation (depreciation) on
investments, net of taxes |
|
$ |
(23,030 |
) |
|
$ |
(49,886 |
) |
|
$ |
(14,143 |
) |
Realized gains (losses) on
extinguishments of debt |
|
$ |
(362 |
) |
|
$ |
- |
|
|
$ |
(1,835 |
) |
NET INCREASE
(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS |
|
$ |
11,381 |
|
|
$ |
(20,996 |
) |
|
$ |
26,026 |
|
Net Increase (Decrease) In Net Assets Resulting from Operations per
Common Share (1): |
|
|
|
|
|
|
|
|
|
Basic and Diluted: |
|
$ |
1.20 |
|
|
$ |
(2.18 |
) |
|
$ |
3.05 |
|
Net Investment Income Per Common Share (1): |
|
|
|
|
|
|
|
|
|
Basic and Diluted: |
|
$ |
3.66 |
|
|
$ |
3.00 |
|
|
$ |
4.92 |
|
Weighted Average Shares of Common Stock Outstanding—Basic and
Diluted (1) |
|
|
9,509,396 |
|
|
|
9,634,468 |
|
|
|
8,536,079 |
|
1The Company completed a Reverse Stock Split of 10 to 1
effective August 26, 2021, the weighted average shares outstanding
and per share values have been adjusted retroactively to reflect
the split for all periods presented.
2During the year ended December 31, 2023, the Company received
$610.2 thousand of non-recurring fee income that was paid in-kind
and included in this financial statement line item.
1 Core investment income represents reported total investment
income as determined in accordance with U.S. generally accepted
accounting principles, or U.S. GAAP, less the impact of purchase
price discount accounting in connection with the Garrison Capital
Inc. (“GARS”) and Harvest Capital Credit Corporation (“HCAP”)
mergers. Portman Ridge believes presenting core investment income
and the related per share amount is useful and appropriate
supplemental disclosure for analyzing its financial performance due
to the unique circumstance giving rise to the purchase accounting
adjustment. However, core investment income is a non-U.S. GAAP
measure and should not be considered as a replacement for total
investment income and other earnings measures presented in
accordance with U.S. GAAP. Instead, core investment income should
be reviewed only in connection with such U.S. GAAP measures in
analyzing Portman Ridge’s financial performance.2 Net leverage is
calculated as the ratio between (A) debt, excluding unamortized
debt issuance costs, less available cash and cash equivalents, and
restricted cash and (B) NAV. Portman Ridge believes presenting a
net leverage ratio is useful and appropriate supplemental
disclosure because it reflects the Company’s financial condition
net of $71.6 million and $33.1 million of cash and cash equivalents
and restricted cash for the quarters ended December 31, 2023 and
December 31, 2022, respectively. However, the net leverage ratio is
a non-U.S. GAAP measure and should not be considered as a
replacement for the regulatory asset coverage ratio and other
similar information presented in accordance with U.S. GAAP.
Instead, the net leverage ratio should be reviewed only in
connection with such U.S. GAAP measures in analyzing Portman
Ridge’s financial condition.
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