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Logan Ridge Finance (LRFC) Incurs Q3 Loss, Costs Down, Stock Falls

Shares of Logan Ridge Finance Corporation LRFC have tumbled 5.6% since the announcement of third-quarter 2021 results last week. It reported a net investment loss of 56 cents per share. The bottom line compared unfavorably with a net investment income of 27 cents in the prior-year quarter.

Logan Ridge Finance’s results were hurt by lower total investment income. However, a decline in expenses offered some support. The company’s portfolio activity remained solid.
 
Net investment loss was $1.5 million against a net investment income of $0.7 million in the prior-year period.

Total Investment Income & Expenses Decline

Total investment income was $3.4 million, plunging 49.6% year over year. The decline was primarily due to a fall in total interest and fee income, and total payment-in-kind interest and dividend income.

Total expenses decreased 18% year over year to $4.9 million. The fall was mainly due to lower interest and financing expenses, and management fees, partially offset by other expenses.

Strong Balance Sheet

As of Sep 30, 2021, Logan Ridge Finance’s cash and cash equivalents totaled $37.4 million, up from $26.1 million as of Jun 30, 2021.

As of Sep 30, 2021, Logan Ridge Finance’s total borrowings were $124.9 million. This comprised $72.8 million of 6.0% fixed-rate notes due 2022 and $52.1 million of 5.75% fixed-rate convertible notes due 2022. There were no outstanding draws on the KeyBank credit facility.

Net asset value was $40.67 per share, up from $40.19 at the end of Dec 31, 2020.

Portfolio Activities Decent

The fair value of Logan Ridge Finance’s total investment portfolio was $195.4 million as of Sep 30, 2021. The company had investments in 33 portfolio companies.

During the quarter, Logan Ridge Finance made nearly $33.3 million of investments and had roughly $64.1 million in repayments and sales. This resulted in net repayments and sales of $30.8 million in the period.

Our Take

Driven by the rise in demand for financing, Logan Ridge Finance’s investment income is expected to grow in the near term. Moreover, lower expenses are likely to aid profitability. Nonetheless, low interest rates remain a drag.
 

Currently, Logan Ridge Finance carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Stocks

Hercules Capital Inc.’s HTGC third-quarter 2021 net investment income of 33 cents per share beat the Zacks Consensus Estimate by a penny. The bottom line was 2.9% down from the year-ago quarter figure.

Hercules Capital recorded a marginal fall in total investment income and higher expenses during the quarter. The balance sheet position remained strong and new commitments were robust.

Goldman Sachs BDC’s GSBD third-quarter 2021 net investment income of 63 cents per share beat the Zacks Consensus Estimate of 48 cents. This included purchase discount amortization of 15 cents per share related to its merger with Goldman Sachs Middle Market Lending Corp in October 2020.

Goldman Sachs BDC’s results benefited from a drastic improvement in total investment income. Rise in net asset value and a solid investment portfolio balance also offered support. However, an increase in operating expenses was a headwind.

TriplePoint Venture Growth BDC Corp.'s TPVG third-quarter 2021 net investment income was 32 cents per share, missing the Zacks Consensus Estimate of 35 cents. The bottom line also declined 20% from the year-ago quarter.

Results reflected a decline in total investment income and higher expenses. Nonetheless, TriplePoint Venture Growth BDC Corp. witnessed robust portfolio activity during the quarter.


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Hercules Capital (HTGC): Free Stock Analysis Report
 
TriplePoint Venture Growth BDC (TPVG): Free Stock Analysis Report
 
Goldman Sachs BDC (GSBD): Free Stock Analysis Report
 
Logan Ridge Finance Corporation (LRFC): Free Stock Analysis Report
 
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