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Silver Spike Investment Corp. (SSIC)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 total investment income was $3.20M, net investment income was $0.00 per share as $2.4M transaction expenses tied to the October 1 CALP loan portfolio acquisition drove higher quarterly expenses; NAV per share was $13.28 .
  • The Company closed the CALP Loan Portfolio acquisition on October 1 and was renamed Chicago Atlantic BDC, Inc. with ticker LIEN on October 2; post-close net assets were ~$302M and investments spanned 28 portfolio companies, materially increasing scale and liquidity versus pre-close levels .
  • Sequentially, Q2 2024 NII was $1.53M ($0.25 per share) and Q1 2024 NII was $(0.08)M ($(0.01) per share), highlighting that Q3’s flat NII reflected non-recurring transaction costs rather than portfolio fundamentals; loans on non-accrual remained zero .
  • No formal quantitative guidance was issued; near-term stock reaction catalysts include integration of the CALP portfolio, deployment of liquidity ($30.1M at quarter-end) and investor re-rating on the enlarged BDC platform focused on cannabis credit .

What Went Well and What Went Wrong

  • What Went Well

    • Closed transformative CALP loan portfolio acquisition, increasing net assets to ~$302M and diversifying to 28 portfolio companies post-close; Company rebranded to Chicago Atlantic BDC (LIEN) .
    • Credit quality remained robust with zero loans on non-accrual at quarter-end; portfolio fair value $55.8M pre-close across first lien loans and secured notes .
    • Management reiterated strategic positioning: “LIEN is the only publicly listed BDC primarily focused on lending to cannabis companies and is a primary source of capital for high quality companies in both the cannabis and other typically underserved sectors.” — Scott Gordon, Executive Chairman & Co-CIO .

  • What Went Wrong

    • Net investment income per share was $0.00 as total expenses rose to $3.2M, including $2.4M transaction costs for the acquisition; this suppressed quarterly earnings despite steady investment income .
    • NAV per share declined sequentially to $13.28 from $13.56 in Q2, driven by dividend payments and transaction expenses related to the acquisition .
    • Continued near-term uncertainty around federal cannabis regulatory reform (DEA rescheduling timing), acknowledged earlier in the year; however, management expected rising refinancing activity and debt capital markets engagement (Q1/Q2 commentary) .

Financial Results

MetricQ1 2024Q2 2024Q3 2024
Total investment income ($USD Millions)$2.80 $3.08 $3.20
Total expenses ($USD Millions)$2.84 $1.56 $3.20 (incl. $2.4M acquisition expenses)
Net investment income ($USD Millions)$(0.08) $1.53 $0.00
Net investment income per share ($)$(0.01) $0.25 $0.00
Net increase (decrease) in net assets from operations ($USD Millions)$0.52 $1.29 $(0.20)
Net increase (decrease) in net assets per share ($)$0.08 $0.21 $(0.03)
NAV per share ($)$13.60 $13.56 $13.28
Liquidity (cash equivalents) ($USD Millions)$33.16 $34.00 $30.10

Segment breakdown (fair value):

SegmentQ1 2024Q2 2024Q3 2024
First lien, senior secured loans ($USD Millions)$46.60 $44.30 $43.40
Secured notes ($USD Millions)$8.20 $8.30 $11.70
Equity securities ($USD Millions)— $0.80 $0.70

Key KPIs:

KPIQ1 2024Q2 2024Q3 2024
Portfolio companies (count)5 7 7 (pre-close) / 28 (post-close)
Loans on non-accrual (count)0 0 0
Total net assets ($USD Millions)$84.52 $84.26 $82.50 (pre-close) / ~$302.00 (post-close)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal revenue/EPS guidanceFY/Q3 2024None provided None provided Maintained (no guidance)
Dividend per shareQ1 2024—$0.25 declared (paid Jun 28) Declared
Dividend per shareQ2 2024—$0.25 declared (paid Sep 27) Maintained
Dividend per shareQ3 2024—Not specified in Q3 release Not specified

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2024, Q2 2024)Current Period (Q3 2024)Trend
Regulatory outlook (DEA rescheduling, SAFE Banking)Management highlighted potential DEA rescheduling benefits (removal of 280E), expecting increased capital markets activity in H2’24 ; acknowledged near-term uncertainty but positive state-level momentum .Focus shifted to closing CALP acquisition and scaling the platform; regulatory backdrop remains supportive but uncertain in timing .Stable positive narrative; execution focus post-close.
Debt capital markets activityExpected acceleration of refinancings and heightened activity (Q1/Q2 commentary) .Post-close, larger platform positioned to capitalize; funded $14.5M subsequent investments and received $9.0M repayments .Improving capacity and pipeline.
Credit qualityNo non-accruals (Q1/Q2) .No non-accruals; portfolio $55.8M pre-close with first liens dominant .Maintained solid credit metrics.
Liquidity/deploymentLiquidity $33.2M (Q1), $34.0M (Q2) .Liquidity $30.1M at Q3; subsequent funding activity indicates ongoing deployment .Active deployment post-close.

Management Commentary

  • “LIEN is the only publicly listed BDC primarily focused on lending to cannabis companies and is a primary source of capital for high quality companies in both the cannabis and other typically underserved sectors.” — Scott Gordon, Executive Chairman & Co-CIO (Q3 press release) .
  • “We have seen positive momentum at the state level…we have recently seen an increase in debt capital markets activity…we are well-positioned to take advantage of [it].” — Scott Gordon (Q2 press release) .
  • “DEA is moving to reclassify cannabis to Schedule III…a major step forward…should have a positive impact on cash flow for cannabis operators…we anticipate an increase in cannabis capital markets activity in the second half of 2024.” — Scott Gordon (Q1 press release) .

Q&A Highlights

  • The Company hosted its Q3 2024 call on Nov 8, 2024; the focus was on the CALP acquisition, rebranding to LIEN, scale and portfolio diversification; a replay was made available on the Company’s website .
  • Detailed transcript not available via our document tools; management clarified that acquisition-related expenses (~$2.4M) drove Q3’s flat NII, and highlighted subsequent funding and repayment activity .

Estimates Context

  • Wall Street consensus estimates (S&P Global) for Q3 2024 EPS and revenue were unavailable for SSIC due to mapping limitations. Values retrieved from S&P Global were unavailable.
  • As a result, we cannot assess beats/misses versus consensus for Q3 2024; notable drivers of the quarter (acquisition-related expenses) suggest limited read-through to ongoing earnings power .

Key Takeaways for Investors

  • The October 1 acquisition and rebranding to Chicago Atlantic BDC (LIEN) materially increase scale (~$302M net assets post-close) and portfolio diversification (28 companies), potentially broadening investor interest and liquidity .
  • Q3’s $0.00 NII per share reflects non-recurring transaction costs rather than deteriorating fundamentals; zero non-accruals and steady investment income ($3.20M) indicate underlying credit stability .
  • Liquidity of $30.1M and subsequent post-quarter funding activity ($14.5M) support near-term deployment and earnings normalization in coming quarters .
  • The cannabis credit niche remains structurally underserved; management expects continued capital markets activity and believes the enlarged platform is well-positioned to capture attractive risk-adjusted returns .
  • With no formal guidance and unavailable consensus, monitor quarterly NII per share, NAV trajectory, non-accruals, and originations as key indicators of earnings power and portfolio health .
  • Near-term trading implications: potential re-rating as investors digest the larger platform (LIEN) and post-close integration; watch for dividend actions and pace of deployment to inform income profile .