Executive Summary

Net investment income rose to $1.0M ($0.37 per share), up from $0.8M ($0.28) in Q2, while total investment income eased to $5.148M from $5.4M; NAV per share declined to $32.31 due to net realized/unrealized losses .
The company executed a transformational exit of its largest equity holding, Nth Degree, for $17.5M in cash, approximately $2.0M above prior quarter fair value, enabling redeployment into interest-earning assets and lowering portfolio equity weighting .
Cost of capital improved via an amendment and extension of the KeyBank revolver: margins reduced 10–5 bps and maturities pushed out; advance rates and concentration limits revised to increase borrowing capacity .
Board raised the Q4 2024 distribution to $0.36 per share, a 9% increase vs Q3’s $0.33, reflecting confidence in long-term earnings power; recurring PIK income mix fell by >200 bps, quality improving .
Wall Street consensus (S&P Global) for Q3 2024 was unavailable due to missing mapping; estimate-based beat/miss assessment not possible.

What Went Well and What Went Wrong

What Went Well

Executed a strategic exit: “sale of our largest equity position, Nth Degree, above our prior quarter fair value… a transformational milestone… We plan to redeploy the cash proceeds into interest earning assets originated by the BC Partners Credit Platform” . Net realized gains on investments totaled $11.068M, driven by affiliate investment realization .
Dividend raised: Board approved a Q4 distribution of $0.36 per share, +9% vs Q3’s $0.33; CEO highlighted dividend progression since reintroduction in 2023 as evidence of turnaround momentum .
Funding terms improved: “amended and extended our revolving credit facility… reduced applicable margins… extended maturity… creating meaningful additional borrowing capacity” . Debt portfolio weight increased to 86.8% with weighted average annualized yield ~12.3% (ex non-accruals/CLOs), enhancing earnings quality .

What Went Wrong

NAV decline: Net assets fell to $86.3M; NAV/share decreased $0.82 QoQ to $32.31, primarily due to net realized and unrealized losses (unrealized losses of $(13.263)M) despite realized gains .
Lower total investment income: TII declined QoQ to $5.148M (from $5.4M), with the CFO citing absence of a prior-quarter nonrecurring dividend and lower expenses offsetting the impact .
Non-accruals persisted: Three portfolio companies on non-accrual; fair value decreased to $8.2M from $10.1M (cost steady at $17.2M), including an additional markdown at Sequoia noted in Q&A, reflecting ongoing workout exposure .

Financial Results

Income and Earnings

Metric	Q3 2023	Q1 2024	Q2 2024	Q3 2024
Total Investment Income ($USD Millions)	$5.162	$5.000	$5.400	$5.148
Net Investment Income ($USD Millions)	$1.154	$0.900	$0.800	$0.995
NII per Share ($USD)	$0.43	$0.35	$0.28	$0.37
Net Increase (Decrease) in Net Assets per Share – Basic & Diluted (GAAP EPS) ($USD)	$(0.73)	—	—	$(0.50)

Notes: No S&P Global consensus available for EPS/revenue comparison this quarter.

Balance Sheet and NAV

Metric	Q1 2024	Q2 2024	Q3 2024
NAV per Share ($USD)	$33.71	$33.13	$32.31
Cash & Equivalents ($USD Millions)	$8.3	$4.3	$5.0
Unused Borrowing Capacity ($USD Millions)	$23.0	$21.9	$35.9

Segment/Instrument Composition (Fair Value)

Segment	Dec 31, 2023 FV ($USD Millions)	Dec 31, 2023 (% FV)	Sep 30, 2024 FV ($USD Millions)	Sep 30, 2024 (% FV)
First Lien Debt	$124.007	65.4%	$121.654	69.3%
Second Lien Debt	$7.918	4.2%	$8.181	4.7%
Subordinated Debt	$23.548	12.4%	$22.487	12.8%
CLOs	$1.600	0.8%	$1.570	0.9%
Joint Venture	$0.450	0.2%	$0.393	0.2%
Equity	$32.135	17.0%	$21.295	12.1%
Total	$189.658	100.0%	$175.580	100.0%

KPIs

KPI	Q1 2024	Q2 2024	Q3 2024
Debt Portfolio (% of total FV)	80.8%	80.0%	86.8%
Weighted Avg Annualized Yield (ex non-accruals/CLOs)	11.4%	11.4%	12.3%
Floating-Rate Debt (% FV of debt)	88.5%	88.1%	88.6%
Non-Accruals – Amortized Cost ($USD Millions)	$17.2	$17.2	$17.2
Non-Accruals – Fair Value ($USD Millions)	$10.6	$10.1	$8.2
Asset Coverage Ratio (%)	—	—	186%
Quarterly Distribution per Share ($USD)	$0.33 (Q2 declared)	$0.33 (Q3 declared)	$0.36 (Q4 declared)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per Share	Q4 2024	$0.33 (Q3 distribution reference)	$0.36	Raised
Credit Facility Margin (Reinvestment Period)	Ongoing	2.90%	2.80%	Lowered
Credit Facility Margin (Amortization Period)	Ongoing	3.25%	3.20%	Lowered
Reinvestment Period End	Facility term	May 2025	Aug 2027	Extended
Facility Maturity	Facility term	May 2027	Aug 2029	Extended
Advance Rates & Concentration Limits	Facility term	Prior limits	Revised to create additional borrowing capacity	Improved capacity

No explicit revenue/margin/OpEx tax guidance was provided.

Earnings Call Themes & Trends

Topic	Q1 2024 (Prior-2)	Q2 2024 (Prior-1)	Q3 2024 (Current)	Trend
Legacy equity rotation/exits	Pipeline robust; equity exposure declining; potential exits expected	Continued progress; Nth Degree valuation discussed; M&A backdrop improving	Executed Nth Degree exit at $17.5M above prior FV; equity % down	Accelerating execution
Portfolio yield/quality	Debt yield 11.4%; floating-rate mix 88.5%	Debt yield 11.4%; floating-rate 88.1%	Debt yield ~12.3%; floating-rate 88.6%	Improving yield
Non-accruals/workouts	3 borrowers; FV $10.6M	3 borrowers; FV $10.1M; cannabis/Lab testing name pressure	3 borrowers; FV $8.2M; Sequoia further markdown	Gradual reduction in FV
Leverage & deployment	Net deployer; leverage ~low end of target; ROE-optimized deployment	Net repayments; cautious deployment; spread compression observed	Redeploying Nth proceeds; less “one-in/one-out”; more flexibility	Flexibility rising
Capital structure/cost	Facility unchanged	No change in facility; unused capacity $21.9M	Facility margins reduced; tenor extended; unused capacity $35.9M	Cost lower, capacity up
Share repurchases	21,867 shares, accretive to NAV	Buyback discussed conceptually	3,697 shares; program to be reset post quarter	Program cadence evolving
Potential corporate actions	Merger concept with Portman Ridge acknowledged	Portfolio alignment noted	Barrier removed post Nth exit; steps “falling into place”	Probability rising

Management Commentary

“We are pleased to announce another solid quarter… highlighted by the sale of our largest equity position, Nth Degree, above our prior quarter fair value… We plan to redeploy the cash proceeds… which we believe will significantly improve the long-term earning power of our portfolio.” — Ted Goldthorpe, CEO .
“The outlook for the long-term earnings power of the portfolio has allowed the Board… to approve a dividend of $0.36 per share for the fourth quarter of 2024” .
“We amended and extended our revolving credit facility… reduced applicable margins and extended the maturity… reduced our overall cost of capital while creating meaningful additional borrowing capacity” .
CFO: “Our net investment income… was $1 million or $0.37 per share… an increase… last quarter… Net asset value… decreased… primarily driven by net realized and unrealized losses on the portfolio” .

Q&A Highlights

Nonrecurring items: “There were not” any in Q3, clarifying quality of NII .
Financing terms: Broadly “more accommodating and aggressive on advance rates and cost of capital,” with Logan’s facility right-sized to its larger portfolio .
Share repurchases: Program size was set before Nth proceeds; will be reset considering lower leverage and higher liquidity; cadence typically quarterly 10b5-1 programs .
Deployment/leverage: Post Nth, Logan has flexibility to be a “market buyer of credit,” potentially accepting marginally lower ROA for better ROE .
Non-accrual markdown: Further mark on Sequoia noted; continued workout processes across names .
Strategic path: Nth exit “removes a very, very big barrier” to potential integration with affiliated vehicles .

Estimates Context

S&P Global consensus estimates for Q3 2024 could not be retrieved due to missing mapping for LRFC in the Capital IQ company map, so a formal beat/miss vs Wall Street is unavailable this quarter. Attempted retrieval resulted in a mapping error (SpgiEstimatesError).

Where estimates may need to adjust: Given higher debt portfolio yields (~12.3%), elevated debt mix (86.8% FV), reduced PIK mix, and greater borrowing capacity, forward NII trajectory may be biased higher as Nth proceeds are redeployed, subject to non-accrual workout outcomes and market spread compression .

Key Takeaways for Investors

The Nth Degree exit is a clear catalyst: reduces equity risk, adds cash to redeploy into yielding assets, and supports higher sustainable NII; watch deployment velocity in Q4/Q1 .
Earnings quality improved: No nonrecurring items; recurring PIK mix declined >200 bps; debt yields and floating-rate exposure remain high, positioning LRFC to benefit from rate environment normalization .
Cost of capital down and duration extended: Facility margin cuts and longer tenor expand ROE potential; unused capacity lifted to ~$35.9M, enabling opportunistic deployment .
NAV pressure remains a watch item: Unrealized losses drove the QoQ NAV drop; continued non-accrual resolution and redeployment should be key to stabilizing NAV .
Dividend trajectory constructive: Q4 distribution raised to $0.36; future increases hinge on timely redeployment and asset performance; payout now reflects greater confidence .
Potential corporate action optionality: Management signaled reduced barriers to integration with affiliated vehicles post Nth exit; any transaction could unlock valuation and scale synergies .
Trading implications: Near term, focus on updates to share repurchase program size, deployment pace, and additional equity exits; medium term, monitor spread trends and non-accrual workouts to gauge NII durability and NAV recovery .

Logan Ridge Finance Corp. (LRFC)·Q3 2024 Earnings Summary