Silver Spike Investment Corporation (NASDAQ:SSIC) Q1 2024 Earnings Report Call Transcript May 10, 2024
Silver Spike Investment Corp. isn't among the 30 most popular stocks among hedge funds at the end of the third quarter (Please see here for the detail).
operator: Hello. Thank you for always being by my side. Welcome to Silver Spike Investment Corporation's 2024 Q1 Earnings Conference Call. All participants are currently in listen-only mode. A question and answer session will follow the speakers' presentations. [Operator Instructions]. Please note that today's meeting is being recorded. I would now like to hand over the conference to our first speaker today, Chief Financial Officer Umesh Mahajan. Please move on.
Umesh Mahajan: good morning. I am Umesh Mahajan, CFO of Silver Spike Investment Corporation. Joining me today is Scott Gordon, CEO of Silver Spike Investment Corporation. Welcome to Silver Spike's first quarter ending March 31, 2024 earnings conference call and live webcast. Silver Spike's financial results for the first quarter ended March 31, 2024 were released yesterday and can be accessed through our website at ssic.silverspikecap.com. A replay of this call is also available on our website. Before we begin, we acknowledge that certain statements made during this conference call that are not based on historical fact (including statements relating to financial guidance) may be deemed forward-looking statements under federal securities laws. I would like to remind everyone that there is.
These forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied by these forward-looking statements. This is because it includes. We encourage you to refer to our most recent SEC filings for information regarding some of these risk factors. SilverSpike assumes no obligation or responsibility to update any forward-looking statements. Please note that the information reported in this call is only as of today, May 10, 2024. Therefore, please note that time-sensitive information may not be accurate at the time of playback or reading of the transcript. Good morning again. Thank you for participating in yesterday's results release and 10-Q. The 8-K is accompanied by management presentation materials, which were filed and made available this morning.
A financial professional in an office surrounded by financial documents and charts.
Those who attended this earnings webcast will also receive a link to the slides for today's discussion. For your convenience, we may refer to slides by number. I cover the presentation slides and then turn them over to Scott Gordon for his thoughts and comments. Before we get into the financial highlights for the quarter ended March 31, 2024, let's briefly summarize the loan portfolio acquisitions announced during the quarter. On February 20, 2024, the Company entered into a definitive agreement to purchase a portfolio of loans from his Chicago Atlantic Loan Portfolio, LLC in exchange for newly issued shares of the Company's common stock, subject to certain customary closing conditions. announced that it did. On April 15, 2024, the Company filed a registration statement on Form N-14 with the Securities and Exchange Commission (SEC) in connection with this loan portfolio acquisition.
We currently expect this transaction to close in mid-2024. Now let's move on to page 3 of our Q1 2024 Financial Highlights presentation. Total investment income for the quarter was $2.8 million compared to his $2.5 million in the first quarter of last year. Approximately $800,000 in expenses, excluding costs specifically related to the acquisition of the loan portfolio. Investment income, excluding trading expenses, was $2.0 million, compared to $1.4 million last year. He incurred transaction-related costs of $2.1 million in the quarter as his definitive contract was signed during the quarter. Net investment income was negative $100,000 and net assets decreased $84.5 million from the prior year due to dividends and transaction expense payments.
Investment income per share, excluding transaction costs, was $0.33 per share, compared to $0.22 per share last year. Net investment income was -$0.01 per share, resulting in period-end net asset value of $13.60 as of March 31, 2024. The Board of Directors also declared a regular quarterly cash dividend of $0.25 per share. This dividend will be paid on June 28th for shareholder records as of June 20th. I won't really go into detail about the next few slides in the slide deck because we've covered them in the past and most investors are already familiar with our story. But if you go back to page 9 and talk about our origination efforts, our deal pipeline remains strong. In general, since the last quarter of 2023, many potential borrowers in the industry have been closely monitoring the movement of interest rates in the credit market and the rescheduling of cannabis to Schedule 3, so they are rushing to borrow money. That never happened.
We are using that period to conduct due diligence and underwrite over 25 borrowers as part of our announced loan portfolio acquisition. And at this time, as the industry continues to grow, the industry's leading operators are beginning to reassess their growth and expansion plans and consider raising additional capital to support their plans. We are actively interacting with many of the industry's best carriers and have an active pipeline of over $425 million. Page 11 shows an overview of the portfolio as of March 31st. Similar new investments this quarter, as shown at the top of the page, have invested more than $54 million, almost $55 million, with an average yield to maturity of about 18%. Let me reiterate a few points about this portfolio.
First, all of our positions are lien loans or secured notes. None of these loans or bonds are in accrual status. More than 90% of our investment portfolio is floating rate loans, and our total portfolio yield of 18% compares favorably with the broader publicly traded BDC universe. So I'd like to ask Scott Gordon to make some comments.
Scott Gordon: Thank you, Umesh. I'd like to take a moment to talk about some recent big news in the industry. That's the DEA's apparent approval of HHS' recommendation to reschedule cannabis. This was a widely anticipated move since the HHS announcement last year. However, the timeline for the process is uncertain and could take up to several years to complete if faced with the challenges of seeking judicial or administrative review. However, this change will have a significant impact on a company's cash flow through the removal of the tax effect of 280E. As with all legislative action in the cannabis space, we view this news as positive, but the devil remains in the timing and implementation details. Given the myriad ambiguities surrounding it, we believe the current capital constraint dynamics in the industry will remain largely unchanged.
We also do not speculate on anything further on the regulatory front because of the rescheduling process. The SAFER Act and other pending reforms will continue to be rocky, as always, and subject to all of the same vagaries and obstacles that have existed for some time. So we're taking this news with some optimism and holding out hope that maybe this time it will be different. Overall, this is clearly a step in the right direction. Now, I'll give it back to Umesh.
Umesh Mahajan: Thank you, Scott. That's all for my prepared remarks. We accept questions. Is there something wrong, Gigi?
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