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Chicago Atlantic BDC, Inc.(LIEN) - 2025 Q1 - Earnings Call Transcript
LIENChicago Atlantic BDC, Inc.(LIEN)2025-05-14 14:00
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Financial Data and Key Metrics Changes - Gross investment income for Q1 2025 was 11.9million,adecreasefrom11.9 million, a decrease from 12.7 million in Q4 2024 [11] - Net investment income was 7.6millionor7.6 million or 0.34 per share, compared to 8.0millionor8.0 million or 0.35 per share in the previous quarter [12] - Net expenses were 4.3million,slightlydownfrom4.3 million, slightly down from 4.4 million in the last quarter [12] - Net assets at quarter end were 301million,withNAVpershareat301 million, with NAV per share at 13.19 [12] Business Line Data and Key Metrics Changes - The company has 31 portfolio companies, with 21% of the portfolio invested outside of cannabis [12] - The average debt position size is 3% of the debt portfolio, with 76% of the portfolio being floating rate [13] - The gross weighted average yield on company debt investments is approximately 16.6% [13] Market Data and Key Metrics Changes - The company has originated 52.8millioningrossfundingssinceOctober1,2024,with52.8 million in gross fundings since October 1, 2024, with 32.3 million committed and 20.8millionfundedinQ12025[7]−Thepipelineincludesapproximately20.8 million funded in Q1 2025 [7] - The pipeline includes approximately 590 million in potential debt transactions across 35 unique companies, with 462millionincannabisopportunitiesand462 million in cannabis opportunities and 128 million in non-cannabis investments [16] Company Strategy and Development Direction - The company focuses on lending to cannabis companies and other underserved markets, aiming to deploy capital with differentiated risk-reward profiles [5] - The strategy includes maintaining a disciplined underwriting approach and being selective with borrowers to build durable investment portfolios [19] - The company aims to grow its dividend component as it scales its platform, having declared a total of 1.27individendsoverthelastfourquarters[8]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementbelievestheoutlookforcommonsensereformsinthecannabisindustryispositive,butthetimingremainsunpredictable[10]−Thecompanyispositionedwellfor2025,focusingonprovenoperatorsandstrongmarketstosupportgrowthinitiatives[10]−Managementemphasizesalong−termviewofpartnershipbuildingwithoperators,regardlessofbroadermarketconditions[23]OtherImportantInformation−Thecompanyhasnonon−accrualscomparedtoanindustryaverageof3.91.27 in dividends over the last four quarters [8] Management's Comments on Operating Environment and Future Outlook - Management believes the outlook for common sense reforms in the cannabis industry is positive, but the timing remains unpredictable [10] - The company is positioned well for 2025, focusing on proven operators and strong markets to support growth initiatives [10] - Management emphasizes a long-term view of partnership building with operators, regardless of broader market conditions [23] Other Important Information - The company has no non-accruals compared to an industry average of 3.9% [7] - A new 100 million credit facility was closed during the quarter, providing ample liquidity for future investments [14] Q&A Session Summary Question: General macro outlook and deployment readiness - The company maintains a focus on individual state markets rather than the broader U.S. cannabis industry, allowing for disciplined deployment of capital [23][25] Question: Pipeline activity comparison to previous quarters - There is no significant difference in the ratio of cannabis to non-cannabis investments, with fluctuations being ordinary [26] Question: Flexibility to increase the credit facility - The company sees room to grow its senior secured credit facility and add modest unsecured notes in a disciplined manner [27] Question: Debt leverage threshold - The company expects to remain well below industry averages for debt leverage in the foreseeable future [28] Question: Dividend growth expectations - The company does not provide specific dividend guidance but will distribute nearly all of its income by the end of the year [30]