Name: Silver Spike Investment Corp. Q2 2024 Earnings Call
Start: 2024-08-09T00:00:00.000Z

Executive Summary

SSIC delivered solid Q2 performance: total investment income rose to $3.08M and net investment income (NII) was $1.53M ($0.25/share), while NAV/share dipped modestly to $13.56 due to dividend payments .
Dividend maintained: Board declared $0.25/share, payable Sept 27, 2024 (record Sept 19), reinforcing income stability for investors .
Portfolio quality intact: no loans on non-accrual; investment portfolio fair value at $53.4M; cash and equivalents grew to $34.0M, supporting future deployment .
Strategic catalyst: timeline for Chicago Atlantic Loan Portfolio (CALP) acquisition updated from “mid-2024” to “Q4 2024,” a scale/liquidity event expected to be accretive to NII post-close .

What Went Well and What Went Wrong

Investment income and NII: Q2 investment income increased to $3.08M; NII of $1.53M despite transaction costs, indicating core earnings resilience .
Portfolio performance: No loans on non-accrual; risk ratings all at Grade 2 (performing in-line), reflecting credit stability in a challenging sector .
Management tone and positioning: “We have seen positive momentum at the state level… we expect an increase in debt capital markets activity… well-positioned to take advantage of [it]” — CEO Scott Gordon, highlighting demand tailwinds and SSIC’s sourcing edge .

Transaction costs elevated: $0.53M in Q2 and $2.64M YTD tied to the CALP transaction pressured reported NII and expenses; management characterizes these as largely non-recurring .
Slight NAV per share decline: NAV/share fell from $13.60 to $13.56 quarter-over-quarter, primarily due to dividend payments, plus modest unrealized depreciation (-$0.23M) .
Timeline shift: CALP acquisition target moved from “mid-2024” to “Q4 2024,” extending the expected timing for scale/liquidity benefits and NII accretion .

Metric	Q2 2023	Q4 2023	Q1 2024	Q2 2024
Total Investment Income ($USD Millions)	$2.89	$3.60	$2.76	$3.08
Total Expenses ($USD Millions)	$0.99	$1.90	$2.84	$1.56
Net Investment Income ($USD Millions)	$1.90	$1.70	$(0.08)	$1.53
NII per Share ($)	$0.31	$0.28	$(0.01)	$0.25
Net Increase in Net Assets per Share ($)	$0.19	$0.40	$0.08	$0.21
NAV per Share (End of Period) ($)	$14.49	$13.77	$13.60	$13.56
Investment Portfolio Fair Value ($USD Millions)	—	$54.12	$54.85	$53.40

Segment composition (Q2 2024 vs prior):

Segment Mix (% of Fair Value)	Dec 31, 2023	Jun 30, 2024
Senior Secured First Lien Term Loans	85.0%	83.0%
Senior Secured Notes	15.0%	15.5%
Equity	0.0%	1.5%

KPIs:

KPI	Q4 2023	Q1 2024	Q2 2024
Cash & Equivalents ($USD Millions)	$32.61	$33.16	$34.00
Loans on Non-Accrual	None	None	None
Weighted Avg YTM of Loans (Gross)	18.00%	18.01%	17.97%
% of Net Assets Invested	63.26%	64.90%	67.31%
Net Assets ($USD Millions)	$85.55	$84.52	$84.26

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per Share	Q2 2024	$0.25 (paid 6/28/24; record 6/20/24)	$0.25 (pay 9/27/24; record 9/19/24)	Maintained
CALP Loan Portfolio Acquisition Closing	2024	Anticipated mid-2024	Anticipated Q4 2024	Revised later timeline

No quantitative revenue/margin guidance provided in the quarter’s materials .

Topic	Previous Mentions (Q4 2023 and Q1 2024)	Current Period (Q2 2024)	Trend
Regulatory/legal backdrop	“Challenging environment for cannabis operators; signs of improved dynamics in several state markets” (Q4) . DEA rescheduling to Schedule III could relieve 280E burden and improve operator cash flow (Q1) .	Continued “positive momentum at the state level” with catalysts expected; uncertainty remains at federal level (Q2) .	Improving at state level; federal uncertain
Capital markets activity	Anticipated more attractive debt opportunities throughout 2024 (Q4) . Expect acceleration in refinancings and capital markets activity in 2H24 (Q1) .	“Increase in debt capital markets activity” recently; SSIC positioned to benefit (Q2) .	Improving
Portfolio performance/credit	No non-accruals; strong performance (Q4) . No non-accruals (Q1) .	No non-accruals; all investments Grade 2; minor unrealized loss (Q2) .	Stable
Strategic M&A/scale	CALP acquisition announced; benefits include scale, diversification, accretion (Q4, Q1) .	Closing timetable shifted to Q4 2024; pro forma ~$210M net assets, ~19.4% loan YTM gross (as of 3/31) (Q2) .	Timing extended; thesis intact

Scott Gordon, CEO (Q2): “We have seen positive momentum at the state level… we expect an increase in debt capital markets activity… The Company’s existing portfolio has performed well… and we are pleased to announce another quarterly dividend of $0.25” .
Scott Gordon, CEO (Q1): DEA’s move to reclassify cannabis to Schedule III “should have a positive impact on cash flow for cannabis operators” by relieving 280E, supporting increased capital markets activity in 2H24 .
Scott Gordon, CEO (Q4): Despite a “continued challenging environment,” SSIC was “pleased with the continued strong performance” and anticipated “more attractive debt-related investment opportunities” through 2024 .

The company hosted a live earnings call and webcast on Aug 9, 2024; a replay is available on the company website .
Based on the published transcript, discussion focused on portfolio performance, dividend policy, and the CALP transaction timeline/expected benefits; no formal quantitative guidance was issued beyond dividend declaration .

S&P Global (Capital IQ) consensus estimates for SSIC were unavailable for Q2 2024 (missing mapping), so we cannot provide EPS or revenue comparisons vs Street. As a result, estimate-based comparisons are omitted and no estimate-driven beats/misses are presented.

Dividend continuity: $0.25/share for Q2 signals income stability and disciplined capital return in a niche BDC strategy .
Core earnings resilient: NII of $1.53M ($0.25/share) despite $0.53M transaction costs; underlying run-rate supported by floating-rate loans and fee income .
Credit quality intact: No non-accruals; portfolio risk ratings at Grade 2; continued focus on first-lien senior secured exposure .
Liquidity to deploy: $34.0M cash and equivalents and active pipeline position SSIC to capitalize on improved debt markets in cannabis and select niches .
Strategic scale catalyst: CALP acquisition targeted for Q4 2024, expected to increase scale/diversification/liquidity and be accretive to NII post-close; monitor closing conditions .
NAV trajectory: NAV/share modestly lower QoQ ($13.60 → $13.56), primarily dividend-driven; watch unrealized marks and deployment pace for future NAV support .
Federal-state dynamic: State-level momentum and potential federal rescheduling remain medium-term tailwinds; volatility persists; underwriting discipline remains key .