Reports Net Investment Income of $0.63 Per Share and Net Asset Value of $20.36 Per Share
Recurring PIK Income as a Percentage of Total Investment Income Declines by Over 200 Basis Points
Continued Share Repurchase Program: Total of 33,429 Shares for an Aggregate Cost of Approximately $0.6 Million Repurchased During the Third Quarter; Accretive to NAV by $0.01 Per Share
Announces Fourth Quarter 2024 Quarterly Distribution of $0.69 Per Share
NEW YORK, Nov. 07, 2024 (GLOBE NEWSWIRE) -- Portman Ridge Finance Corporation (Nasdaq: PTMN) (the "Company” or "Portman Ridge”) announced today its financial results for the third quarter ended September 30, 2024.
Third Quarter 2024 Highlights
- Total investment income for the third quarter of 2024 was $15.2 million, as compared to $16.3 million for the second quarter of 2024, and $18.6 million for the third quarter of 2023.
- Core investment income¹, excluding the impact of purchase price accounting, for the third quarter of 2024 was $15.2 million, as compared to $16.2 million for the second quarter of 2024, and $18.3 million for the third quarter of 2023.
- Net investment income ("NII”) for the third quarter of 2024 was $5.8 million ($0.63 per share) as compared to $6.5 million ($0.70 per share) in the second quarter of 2024, and $7.2 million ($0.75 per share) for the third quarter of 2023.
- Net asset value ("NAV”), as of September 30, 2024, was $188.0 million ($20.36 per share), as compared to NAV of $196.4 million ($21.21 per share) as of June 30, 2024.
- Total shares repurchased in open market transactions under the Renewed Stock Repurchase Program during the quarter ended September 30, 2024, were 33,429 shares at an aggregate cost of approximately $0.6 million, which was accretive to NAV by $0.01 per share.
- In July, the Company amended the terms of the senior secured revolving credit facility ("JPM Credit Facility”) with JPMorgan Chase Bank, National Association ("JPM”) by increasing the aggregate principal amount by $85.0 million, for a total of $200.0 million, and reduced the applicable margin from 2.80% per annum to 2.50% per annum. Additionally, the reinvestment period was extended from April 29, 2025 to August 29, 2026, and the maturity date was extended from April 29, 2026 to August 29, 2027. Finally, using the amended JPM Credit Facility, the Company refinanced the remaining $85.0 million of the Senior Secured Notes, due November 20, 2029 and issued by Portman Ridge Funding 2018-2 LLC (the "2018-2 Secured Notes”), on August 20, 2024.
- On November 7, 2024, the Company declared a cash distribution of $0.69 per share of common stock. The distribution is payable on November 29, 2024 to stockholders of record at the close of business on November 19, 2024.
Ted Goldthorpe, Chief Executive Officer of Portman Ridge, stated, "Following the strong earnings we saw in the first half of 2024, the Company's third quarter earnings were temporarily impacted by prudent cash and portfolio management initiatives prior to successfully refinancing the 2018-2 Secured Notes. However, I am very pleased with the work we did on the right-side of the balance sheet and the substantial improvements we made to the Company's debt capital structure. Specifically, the Company upsized and termed out the JPM Credit Facility, while also reducing the spread by a full 30 basis points. Further, using the upsized and lower cost JPM Credit Facility, the Company refinanced the remaining $85.0 million of 2018-2 Secured Notes at the end of August, which resulted in further net spread savings of approximately 28 basis points. These savings are significant, and the Company's new lower cost of financing positions the Company well for the future.
With that in mind, we continue to believe our stock remains undervalued and thus we continued repurchasing shares during the third quarter of 2024 under our Rule 10b-5 stock repurchase program. Specifically, during the quarter ended September 30, 2024, the Company repurchased 33,429 shares in the open market for an aggregate cost of approximately $0.6 million, which was accretive to NAV by $0.01 per share and reinforces our commitment to increasing shareholder value.
Looking ahead to the final quarter of 2024 and the beginning of 2025, with the Company's balance sheet fortified by the amended lower cost JPM Credit Facility, we expect to be active in the market and net deployers of the Company's capital which we believe will restore net investment income back in line with more normalized levels. Above all, despite the current economic uncertainty and a dynamic interest rate environment, we remain confident in our prudent investment strategy, strong pipeline, and experienced management team, and believe the Company remains well positioned with strong spillover earnings to continue to deliver positive returns to our shareholders.”
Selected Financial Highlights
- Total investment income for the quarter ended September 30, 2024, was $15.2 million, of which $12.7 million was attributable to interest income, inclusive of payment-in-kind income, from the Debt Securities Portfolio. This compares to total investment income of $18.6 million for the quarter ended September 30, 2023, of which $15.8 million was attributable to interest income, inclusive of payment-in-kind income, from the Debt Securities Portfolio.
- Core investment income for the third quarter of 2024, excluding the impact of purchase discount accretion, was $15.2 million, a decrease of $3.1 million as compared to core investment income of $18.3 million for the third quarter of 2023.
- Net investment income ("NII”) for the third quarter of 2024 was $5.8 million ($0.63 per share) as compared to $7.2 million ($0.75 per share) for the third quarter of 2023.
- Non-accruals on debt investments, as of September 30, 2024, were nine debt investments representing 1.6% and 4.5% of the Company's investment portfolio at fair value and amortized cost, respectively. This compares to nine debt investments representing 0.5% and 4.5% of the Company's investment portfolio at fair value and amortized cost, respectively, as of June 30, 2024.
- Total investments at fair value as of September 30, 2024, were $429.0 million and consisted of investments in 95 portfolio companies. The debt investment portfolio at fair value as of September 30, 2024 was $347.0 million, which excludes CLO Funds and Joint Ventures, and was comprised of 72 different portfolio companies across 28 different industries with an average par balance per entity of approximately $2.7 million. This compares to total investments of $444.4 million at fair value as of June 30, 2024 and consisted of investments in 92 portfolio companies. The debt investment portfolio at fair value as of June 30, 2024 was $358.9 million, which excludes CLO Funds and Joint Ventures, and was comprised of 75 different portfolio companies across 28 different industries with an average par balance per entity of approximately $2.6 million.
- Weighted average contractual interest rate on our interest earning Debt Securities Portfolio as of September 30, 2024 was approximately 11.9%.
- Par value of outstanding borrowings, as of September 30, 2024, was $267.5 million compared to $285.1 million as of June 30, 2024, with an asset coverage ratio of total assets to total borrowings of 170% and 169%, respectively. On a net basis, leverage as of September 30, 2024 was 1.3x² compared to net leverage of 1.3x² as of June 30, 2024.
Operating results for the three months ended September 30, 2024, and September 30, 2023, were as follows:
| For the Three Months EndedSeptember 30, | |||||||||
| ($ in thousands, except share and per share amounts) | 2024 | 2023 | |||||||
| Total investment income | $ | 15,177 | $ | 18,574 | |||||
| Total expenses | 9,375 | 11,408 | |||||||
| Net Investment Income | 5,802 | 7,166 | |||||||
| Net realized gain (loss) on investments | (11,419 | ) | (1,636 | ) | |||||
| Net change in unrealized gain (loss) on investments | 4,511 | 1,708 | |||||||
| Tax (provision) benefit on realized and unrealized gains (losses) on investments | - | 264 | |||||||
| Net realized and unrealized appreciation (depreciation) on investments, net of taxes | (6,908 | ) | 336 | ||||||
| Net realized gain (loss) on extinguishment of debt | (403 | ) | (57 | ) | |||||
| Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (1,509 | ) | $ | 7,445 | ||||
| Net Increase (Decrease) In Net Assets Resulting from Operations per Common Share: | |||||||||
| Basic and Diluted: | $ | (0.16 | ) | $ | 0.78 | ||||
| Net Investment Income Per Common Share: | |||||||||
| Basic and Diluted: | $ | 0.63 | $ | 0.75 | |||||
| Weighted Average Shares of Common Stock Outstanding - Basic and Diluted | 9,244,033 | 9,505,172 | |||||||
Investment Income
The composition of our investment income for the three and nine months ended September 30, 2024, and September 30, 2023, was as follows:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||||||
| Interest income, excluding CLO income and purchase discount accretion | $ | 11,434 | $ | 13,174 | $ | 35,109 | $ | 41,436 | ||||||||||||
| Purchase discount accretion | 25 | 238 | 210 | 1,706 | ||||||||||||||||
| PIK income | 1,552 | 2,421 | 5,759 | 4,987 | ||||||||||||||||
| CLO income | 254 | 502 | 1,335 | 1,879 | ||||||||||||||||
| JV income | 1,669 | 2,073 | 5,122 | 6,861 | ||||||||||||||||
| Fees and other income | 243 | 166 | 505 | 1,658 | ||||||||||||||||
| Investment Income | $ | 15,177 | $ | 18,574 | $ | 48,040 | $ | 58,527 | ||||||||||||
| Less: Purchase discount accretion | $ | (25 | ) | $ | (238 | ) | $ | (210 | ) | $ | (1,706 | ) | ||||||||
| Core Investment Income | $ | 15,152 | $ | 18,336 | $ | 47,830 | $ | 56,821 | ||||||||||||
Fair Value of Investments
The composition of our investment portfolio as of September 30, 2024, and December 31, 2023, at cost and fair value was as follows:
| ($ in thousands) | September 30, 2024 | December 31, 2023 | ||||||||||||||||||||||
| Security Type | Cost/Amortized Cost | Fair Value | Fair Value Percentage of Total Portfolio | Cost/Amortized
Cost | Fair Value | Fair Value Percentage of Total Portfolio | ||||||||||||||||||
| First Lien Debt | $ | 338,616 | $ | 316,444 | 73.8 | % | $ | 351,858 | $ | 336,599 | 71.9 | % | ||||||||||||
| Second Lien Debt | 36,758 | 28,885 | 6.7 | % | 50,814 | 41,254 | 8.8 | % | ||||||||||||||||
| Subordinated Debt | 8,056 | 1,696 | 0.4 | % | 7,990 | 1,224 | 0.3 | % | ||||||||||||||||
| Collateralized Loan Obligations | 7,881 | 6,786 | 1.6 | % | 9,103 | 8,968 | 1.9 | % | ||||||||||||||||
| Joint Ventures | 64,153 | 52,288 | 12.2 | % | 71,415 | 59,287 | 12.7 | % | ||||||||||||||||
| Equity | 29,493 | 22,879 | 5.3 | % | 31,280 | 20,533 | 4.4 | % | ||||||||||||||||
| Asset Manager Affiliates(1) | 17,791 | - | - | 17,791 | - | - | ||||||||||||||||||
| Derivatives | 31 | - | - | 31 | - | - | ||||||||||||||||||
| Total | $ | 502,779 | $ | 428,978 | 100.0 | % | $ | 540,282 | $ | 467,865 | 100.0 | % | ||||||||||||
Liquidity and Capital Resources
As of September 30, 2024, the Company had $267.5 million (par value) of borrowings outstanding at a current weighted average interest rate of 6.7%, of which $108.0 million par value had a fixed rate and $159.5 million par value had a floating rate. This balance was comprised of $159.5 million of outstanding borrowings under the JPM Credit Facility, and $108.0 million of 4.875% Notes due 2026. On August 20, 2024, an optional redemption of the CLO occurred, and all rated notes were repaid in full. As of September 30, 2024, no 2018-2 Secured Notes were outstanding.
As of September 30, 2024, and December 31, 2023, the fair value of investments and cash were as follows:
| ($ in thousands) | ||||||||
| Security Type | September 30, 2024 | December 31, 2023 | ||||||
| Cash and cash equivalents | $ | 13,736 | $ | 26,912 | ||||
| Restricted Cash | 13,039 | 44,652 | ||||||
| First Lien Debt | 316,444 | 336,599 | ||||||
| Second Lien Debt | 28,885 | 41,254 | ||||||
| Subordinated Debt | 1,696 | 1,224 | ||||||
| Equity | 22,879 | 20,533 | ||||||
| Collateralized Loan Obligations | 6,786 | 8,968 | ||||||
| Asset Manager Affiliates | - | - | ||||||
| Joint Ventures | 52,288 | 59,287 | ||||||
| Derivatives | - | - | ||||||
| Total | $ | 455,753 | $ | ()[\]\\.,;:\s@\"]+)*)|(\".+\"))@((\[[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\])|(([a-zA-Z\-0-9]+\.)+[a-zA-Z]{2,}))$/;return b.test(a)}$(document).ready(function(){if(performance.navigation.type==2){location.reload(true)}$("iframe[data-lazy-src]").each(function(b){$(this).attr("src",$(this).attr("data-lazy-src"))});if($(".owl-article-body-images").length){$(".owl-article-body-images").owlCarousel({items:1,loop:true,center:false,dots:false,autoPlay:true,mouseDrag:false,touchDrag:false,pullDrag:false,nav:true})}var a=$("#display_full_text").val();if(a==0){$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:$("#cms_article_id").val()},dataType:"json",success:function(b){},error:function(b,d,c){}})}$(".read-full-article").on("click",function(d){d.preventDefault();var b=$(this).attr("data-cmsArticleId");var c=$(this).attr("data-productId");var f=$(this).attr("data-href");dataLayer.push({event:"paywall_click",paywall_name:"the_manila_times_premium",paywall_id:"paywall_article_"+b});$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:b,productId:c},dataType:"json",success:function(e){window.location.href=$("#BASE_URL").val()+f},error:function(e,h,g){}})});$(".article-embedded-newsletter-form .close-btn").on("click",function(){$(".article-embedded-newsletter-form").fadeOut(1000)})});$(document).on("click",".article-embedded-newsletter-form .newsletter-button",function(){var b=$(".article-embedded-newsletter-form .newsletter_email").val();var d=$("#ga_user_id").val();var c=$("#ga_user_yob").val();var a=$("#ga_user_gender").val();var e=$("#ga_user_country").val();if(validateEmail(b)){$.ajax({url:"/ajax/sendynewsletter",type:"POST",data:{email:b},success:function(f){$(".article-embedded-newsletter-form .nf-message").html(f);$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000);dataLayer.push({event:"newsletter_sub",user_id:d,product_name:"newsletter",gender:a,yob:c,country:e})},error:function(f,h,g){}})}else{$(".article-embedded-newsletter-form .nf-message").html("Please enter a valid email address.");$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000)}});$(document).on("click",".article-embedded-newsletter-form .nf-message",function(){$(this).removeClass("show");$(this).html("")});
| ||||