Name: Silver Spike Investment Corp. Q4 2023 Earnings Call
Start: 2024-03-28T00:00:00.000Z

Executive Summary

Q4 2023 total investment income rose to $3.60M, driving net investment income (NII) of $1.70M ($0.28/sh) despite $0.70M one-time transaction expenses related to the CALP Loan Portfolio Acquisition; net increase in net assets from operations was $2.50M ($0.40/sh) .
NAV per share decreased to $13.77 from $14.06 in Q3 2023, primarily due to dividend payments; net assets ended the quarter at $85.6M .
A $0.25 cash dividend was declared (paid Mar 28, 2024; record Mar 20, 2024); no loans were on non-accrual and the company received full repayment on one secured loan .
Strategic catalyst: definitive agreement to acquire Chicago Atlantic Loan Portfolio (“CALP”) via stock; pro forma net assets ~$213M and ~27 portfolio companies, with anticipated closing in mid-2024, supporting scale, liquidity, and NII accretion .

What Went Well and What Went Wrong

NII held strong at $1.70M and $0.28/sh, with total investment income up to $3.60M; net increase in net assets from operations rose to $2.50M ($0.40/sh) aided by a $0.80M net unrealized gain .
Credit quality: no loans on non-accrual; one secured loan fully repaid during the quarter, signaling ongoing portfolio performance .
Liquidity of $32.6M (cash equivalents) provides ample dry powder; Board declared a $0.25 dividend for the quarter .
CEO tone constructive: “We are pleased... despite the continued challenging environment... encouraged by signs of improved market dynamics... anticipate more attractive debt-related opportunities... will seek to add investments... in a disciplined manner” .

Total expenses increased to $1.90M including $0.70M transaction expenses tied to the CALP acquisition, pressuring reported NII per share versus potential run-rate .
NAV per share declined to $13.77 from $14.06 in Q3 (primarily dividend-driven); total net assets fell to $85.6M from $87.4M .
Portfolio fair value decreased to $54.1M from $57.4M in Q3, reflecting the secured loan repayment and no new investments during the quarter .
Management continues to flag industry headwinds for cannabis operators and investors, underscoring a challenging macro backdrop for deployment .

Metric	Q2 2023	Q3 2023	Q4 2023
Total Investment Income ($USD Millions)	$2.89	$2.92	$3.60
Total Expenses ($USD Millions)	$1.00	$1.30	$1.90
Loan Portfolio Acquisition Expenses ($USD Millions)	$0.00	$0.00	$0.70
Net Investment Income ($USD Millions)	$1.90	$1.62	$1.70
NII per Share ($USD)	$0.31	$0.26	$0.28
Net Unrealized Gain/(Loss) ($USD Millions)	$(0.48)	$(0.34)	$0.80
Net Increase in Net Assets from Operations ($USD Millions)	$1.21	$1.27	$2.50
Net Increase from Ops per Share ($USD)	$0.19	$0.20	$0.40
NAV per Share ($USD)	$14.49	$14.06	$13.77
Net Assets ($USD Millions)	$90.0	$87.4	$85.6
Investment Portfolio Fair Value ($USD Millions)	$57.67	$57.38	$54.12
Available Liquidity ($USD Millions)	$32.0	$29.8	$32.6

Segment/Portfolio breakdown (Q4 2023):

Instrument	Fair Value ($USD Millions)	Portfolio Companies	Notes
Secured loans	$46.0	3	First-lien senior secured, floating-rate exposure
Secured notes	$8.1	2	Fixed-rate notes
Total portfolio	$54.1	5	Weighted avg loan YTM (gross): 18.00%

KPIs:

KPI	Q2 2023	Q3 2023	Q4 2023
% of Net Assets Invested	64.04%	65.65%	63.26%
Weighted Avg Loan YTM (Gross)	18.08%	18.20%	18.00%
Non-Accrual Loans	None	None	None
Dividend per Share	$0.63 (Q2; $0.23 reg + $0.40 special)	$0.70 (Q3; $0.25 reg + $0.45 special)	$0.25 (Q4 reg)

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per share	Q4 2023	Special dividend expected in Q4 per Q2 commentary	$0.25 regular dividend declared (record 3/20/24; pay 3/28/24)	Maintained regular; special not repeated
CALP Loan Portfolio Acquisition closing	Mid-2024	Not previously provided	Anticipated closing mid-2024; pro forma net assets ~$213M, ~27 companies, ~19.1% gross YTM	New strategic timeline/catalyst
Investment activity	Q4 2023	No specific guidance	No investments in Q4; one full repayment	n/a (disclosed actuals)

Topic	Previous Mentions (Q2 2023, Q3 2023)	Current Period (Q4 2023)	Trend
Regulatory/legal (SAFE/rescheduling)	Sector remains outside traditional bank/alt managers; regulatory steps helpful but not decisive	Management “encouraged by signs of improved market dynamics,” continuing disciplined deployment	Gradual improvement in state markets; policy backdrop still cautious
Portfolio quality/non-accruals	No non-accruals; growing loan book	No non-accruals; one full repayment	Stable to improving quality
Deployment/investment activity	One investment in Q2; no investments in Q3	No investments in Q4; preparing for CALP portfolio scale-up	Near-term pause; potential acceleration post-transaction
Yield/returns	Weighted avg YTM ~18.08–18.20% in Q2/Q3	YTM 18.00%; pro forma ~19.1% post-CALP	Slightly lower in Q4; pro forma higher
Capital return (dividends)	$0.63 (Q2; reg + special)	$0.70 (Q3; reg + special)	$0.25 (Q4 reg)

Scott Gordon, CEO: “We are pleased to have announced a dividend of $0.25 per share... pleased with the continued strong performance of our portfolio companies and remain encouraged by signs of improved market dynamics for several state markets... anticipate more attractive debt-related investment opportunities... will seek to add investments... in a disciplined manner” .
Strategic intent: The CALP Loan Portfolio Acquisition is expected to increase scale and liquidity, enhance diversification, improve access to capital markets, and be accretive to NII; anticipated mid-2024 close .

A formal earnings call transcript for Q4/FY2023 was not available in the document repository; the company provided a webcast and replay link for the March 28, 2024 call .
No additional Q&A disclosures or clarifications were accessible via transcripts; analysis relies on the press release and accompanying exhibits .

Wall Street consensus (S&P Global/Capital IQ) for SSIC Q4 2023 EPS and revenue was unavailable in the SPGI mapping; comparisons to consensus cannot be provided at this time. Values would normally be retrieved from S&P Global.
In the absence of consensus, relative performance was assessed versus prior quarter trends (NII, NAV, portfolio fair value, YTM) and disclosed outcomes .

Q4 print showed resilient NII ($1.70M; $0.28/sh) and a strong $2.50M net increase in net assets from operations, offset by one-time $0.70M transaction costs tied to strategic M&A positioning; underlying earnings power appears intact .
Credit quality remains solid: no non-accruals and one full repayment; supports dividend sustainability and portfolio durability in a challenging sector .
NAV drift lower to $13.77 was primarily dividend-related; consistent with capital return strategy while preserving liquidity ($32.6M) for future deployment .
The CALP Loan Portfolio Acquisition is a potential step-change catalyst for scale (~$213M pro forma net assets), diversification (~27 companies), and NII accretion; closing anticipated mid-2024 .
Near-term deployment was muted (no new investments in Q4), but management cites improved market dynamics; watch for post-close ramp in originations and syndications .
Yield profile remains attractive (18.00% weighted average loan YTM; ~19.1% pro forma), supporting high risk-adjusted return potential amid industry barriers to traditional capital .
Trade setup: dividends normalize post special payouts; transaction progress and post-close portfolio growth are likely narrative drivers; monitor regulatory developments and state-level demand signals cited by management .