Silver Spike Investment (SSIC) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Gross investment income for Q1 2024 was $2.8 million, an increase from$2.5 million in Q1 2023 [9] - Net investment income was negative $0.01 per share, with net asset value at$13.60 as of March 31, 2024 [11] - The company declared a quarterly cash dividend of $0.25 per share, payable on June 28, 2024 [11] Business Line Data and Key Metrics Changes - The company incurred transaction-related expenses of$2.1 million in the quarter due to the loan portfolio acquisition [14] - The investment income, excluding transaction expenses, was $2 million compared to$1.4 million last year [14] - The portfolio summary indicated over $54 million invested with an average yield to maturity of about 18$425 million, indicating strong origination efforts despite a cautious borrowing environment [13] - The competitive dynamic for the lending industry remains unchanged, with no expected significant change in yields or overall dynamics in the near term [25] Company Strategy and Development Direction - The company is focused on supporting good operators in the cannabis industry as they revisit their growth and expansion plans [26] - The anticipated rescheduling of cannabis is viewed positively, but the company does not expect immediate changes in capital supply dynamics [18][25] Management's Comments on Operating Environment and Future Outlook - Management expressed a mildly optimistic view regarding the rescheduling of cannabis, noting potential positive impacts on cash flows for portfolio companies [17][19] - The current dynamic of capital constraints in the industry is expected to remain largely unchanged despite the legislative developments [18][25] Other Important Information - The company filed a registration statement on Form N-14 with the SEC for the loan portfolio acquisition, expecting the transaction to close in mid-2024 [9][23] Q&A Session Summary Question: Progress on the transaction and regulatory review updates - Management indicated that the approval process is proceeding as anticipated, with comments from the SEC expected soon [23] Question: Implications of cannabis rescheduling - Management noted that the rescheduling would positively impact cash flows and credit metrics for portfolio companies, but does not expect a significant change in capital supply dynamics [24][25] Question: Demand side dynamics in light of 280E news - Management acknowledged that some operators may take a wait-and-see approach, but many will still seek capital for growth plans [32][34] Question: Clarification on transaction structure with Chicago Atlantic - Management confirmed that the transaction is completely separate from the REIT and involves a different holding company [36]