425: Silver Spike Investment Corp. Announces Fiscal Year End 2023 Financial Results, Reports NAV Decrease

Silver Spike Investment Corp. reports its fiscal year end 2023 results, including a net investment income of $1.7 million, or $0.28 per share, and a decrease in NAV per share to $13.77.

Summary

• Silver Spike Investment Corp. (SSIC) announced its financial results for the fiscal year ended December 31, 2023.
• Total investment income for the quarter ended December 31, 2023, was $3.6 million.
• Net investment income was $1.7 million, or $0.28 per share for the same period.
• The company's investment portfolio had a fair value of $54.1 million as of December 31, 2023.
• Net asset value (NAV) per share decreased from $14.06 on September 30, 2023, to $13.77 on December 31, 2023, primarily due to dividend payments.
• A cash dividend of $0.25 per share was declared, payable on March 28, 2024, to stockholders of record on March 20, 2024.
• On February 20, 2024, SSIC announced an agreement to purchase a loan portfolio from Chicago Atlantic Loan Portfolio, LLC (CALP) in exchange for newly issued shares of SSIC's common stock.
• As of December 31, 2023, the company had $32.6 million in available liquidity, all in cash equivalents.
• For the year ended December 31, 2023, net investment income was $6.63 million, or $1.07 per share.
• The company recorded a net increase in net assets from operations of $7.34 million, or $1.18 per share for the year ended December 31, 2023.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the company announced a dividend and is pursuing an acquisition, the NAV decreased, and the cannabis industry faces challenges. The management's outlook is cautiously optimistic.

Positives

• The company declared a cash dividend of $0.25 per share.
• SSIC has $32.6 million in available liquidity.
• The company made no investments during the quarter ended December 31, 2023.
• The company received full repayment on one of its secured loan investments during the quarter ended December 31, 2023.
• As of December 31, 2023, there were no loans on non-accrual status.

Negatives

• NAV per share decreased from $14.06 on September 30, 2023, to $13.77 on December 31, 2023.
• Total net assets decreased from $87.4 million as of September 30, 2023, to $85.6 million as of December 31, 2023.

Risks

• The challenging environment for cannabis operators and investors is a concern.
• The company faces risks and uncertainties related to the Loan Portfolio Acquisition, including the timing of closing, ability to realize benefits, and potential litigation.
• Changes in the economy, financial markets, and political environment could impact the company's performance.
• Elevated levels of inflation could impact the company and its portfolio companies.
• The company's ability to locate suitable investments and the performance of the loans included in the CALP Loan Portfolio are risks.

Future Outlook

The company anticipates more attractive debt-related investment opportunities with favorable risk/reward characteristics throughout the remainder of 2024 and will seek to add investments to the portfolio in a disciplined manner.

Management Comments

• Scott Gordon, Chairman and Chief Executive Officer of the Company, commented 'We are pleased to have announced a dividend of $0.25 per share.'
• Management is pleased with the continued strong performance of their portfolio companies and remain encouraged by signs of improved market dynamics for several state markets.
• Management anticipates more attractive debt-related investment opportunities with favorable risk/reward characteristics throughout the remainder of 2024, and they will seek to add investments to the portfolio in a disciplined manner.

Industry Context

The company operates in the specialty finance sector, focusing on direct loans to middle-market companies, particularly in the cannabis and health and wellness industries; the challenging environment for cannabis operators and investors is a key factor influencing the company's performance and strategy.

Comparison to Industry Standards

• Comparing Silver Spike's performance to other BDCs focused on the cannabis industry is difficult due to the limited number of publicly traded comparables.
• NewLake Capital Partners (NLCP) and AFC Gamma (AFCG) are two other BDCs that invest in the cannabis sector.
• It would be useful to compare SSIC's NAV per share performance, dividend yield, and portfolio composition to these peers to assess its relative performance.
• Given the challenging environment for cannabis operators, SSIC's ability to maintain a positive net investment income is a positive sign, but further analysis is needed to determine if it is outperforming or underperforming its peers.

Stakeholder Impact

• Shareholders will receive a dividend of $0.25 per share.
• The Loan Portfolio Acquisition could impact shareholders through changes in the company's stock value and future performance.
• The company's focus on the cannabis industry could impact stakeholders due to the regulatory and market risks associated with that sector.

Next Steps

• The company will host a conference call and webcast on March 28, 2024, to discuss the financial results.
• Stockholders are urged to read the Proxy Statement/Prospectus related to the Loan Portfolio Acquisition.
• The company will seek to add investments to the portfolio in a disciplined manner throughout the remainder of 2024.

Key Dates