SLR Investment Corp. Announces Quarter and Fiscal Year Ended December 31, 2022 Financial Results
SLR Investment Corp. (NASDAQ: SLRC) reported a net investment income of $22.5 million ($0.41 per share) for Q4 2022 and $76.4 million ($1.48 per share) for the fiscal year ending December 31, 2022. The company declared a monthly distribution of $0.136667 per share, totaling $0.41 for Q1 2023. As of December 31, 2022, the net asset value (NAV) per share was $18.33 with total assets of $2.9 billion. Investments made in 2022 totaled $1.3 billion, with total repayments of $971.9 million. The net debt-to-equity ratio stands at 1.08x.
- Record originations of $1.3 billion in investments for 2022, with over 90% in specialty finance.
- Net investment income increased to $76.4 million for the fiscal year 2022, compared to $60.9 million in 2021.
- Net realized and unrealized losses of approximately $58.0 million for the fiscal year ended December 31, 2022.
- Earnings per share decreased to $0.35 in 2022 from $1.41 in 2021.
Net Investment Income of
Distributions of
NEW YORK , Feb. 28, 2023 (GLOBE NEWSWIRE) -- SLR Investment Corp. (NASDAQ: SLRC) (the “Company” or “SLRC”) today reported net investment income of
At December 31, 2022, net asset value (NAV) was
On February 28, 2023, the Company’s Board of Directors (the “Board”) declared a monthly distribution of
HIGHLIGHTS:
At December 31, 2022:
Comprehensive Investment Portfolio* fair value:
Number of unique issuers: approximately 800
Net assets:
Net asset value per share:
Net debt-to-equity**: 1.08x
Comprehensive Investment Portfolio Activity*** for the Quarter Ended December 31, 2022:
Investments made during the quarter:
Investments prepaid and sold during the quarter:
Comprehensive Investment Portfolio Activity*** for the Year Ended December 31, 2022:
Investments made during the year:
Investments prepaid and sold during the year:
Operating Results for the Quarter Ended December 31, 2022:
Net investment income:
Net investment income per share:
Net realized and unrealized loss:
Net increase in net assets from operations:
Earnings per share:
Operating Results for the Year Ended December 31, 2022:
Net investment income:
Net investment income per share:
Net realized and unrealized loss:
Net increase in net assets from operations:
Earnings per share:
* The Comprehensive Investment Portfolio for the quarter and year ended December 31, 2022 is comprised of SLRC’s investment portfolio and SLR Credit Solutions’ (“SLR-CS”) full portfolio, SLR Equipment Finance’s (“SLR-EF”) full portfolio, Kingsbridge Holdings, LLC’s (“KBH”) full portfolio, SLR Business Credit’s (“SLR-BC”) full portfolio, SLR Healthcare ABL’s (“SLR-HC ABL”) full portfolio owned by the Company (collectively, the Company’s “Commercial Finance Portfolio Companies”), and the senior secured loans held by the SLR Senior Lending Program (“SSLP”) attributable to the Company, and excludes the Company’s fair value of the equity interests in SSLP and the Commercial Finance Portfolio Companies and also excludes SLRC’s loan to KBH.
** Please see Liquidity and Capital Resources below.
*** Comprehensive Portfolio Activity for the quarter and year ended December 31, 2022 includes gross originations of the Commercial Finance Portfolio Companies.
“In 2022, SLR Investment Corp. had record originations of
“The continuing market uncertainties and volatility have resulted in improved pricing for middle market loans with wider spreads, higher yields and better structures than we have seen in a number of years,” said Bruce Spohler, Co-CEO of SLR Investment Corp. “We continue to be confident in the performance of our investments within each of our asset classes as well as the prospects for additional portfolio growth in what we believe will be an attractive vintage for all our business segments.”
Conference Call and Webcast
The Company will host an earnings conference call and audio webcast at 10:00 a.m. (Eastern Time) on, Wednesday, March 1, 2023. All interested parties may participate in the conference call by dialing (800) 225-9448 approximately 5-10 minutes prior to the call, international callers should dial (203) 518-9708. Participants should reference SLR Investment Corp. and Conference ID: SLRC4Q22. A telephone replay will be available until March 15, 2023 and can be accessed by dialing (800) 839-2434. International callers should dial (402) 220-7211. This conference call will also be broadcast live over the Internet and can be accessed by all interested parties from the Event Calendar within the “Investors” tab of SLR Investment Corp.’s website, www.slrinvestmentcorp.com. Please register online prior to the start of the call. For those who are not able to listen to the broadcast live, a replay of the webcast will be available soon after the call.
Comprehensive Investment Portfolio
Portfolio Activity
During the three months ended December 31, 2022, SLRC had total originations of
| For the Quarter Ended December 31, 2022 | ||||||||||
| ($mm) | ||||||||||
| Asset Class | Sponsor Finance(1) | Asset-based Lending(2) | Equipment Finance(3) | Life Science Finance | Total Comprehensive Investment Portfolio Activity | |||||
| Originations | ||||||||||
| Repayments / Amortization | ||||||||||
| Net Portfolio Activity | $(59.7) | $69.7 | $36.1 | $(24.9) | $ 21.2 | |||||
During the year ended December 31, 2022, SLRC had total originations of
| For the Year Ended December 31, 2022 | |||||||||||
| ($mm) | |||||||||||
| Asset Class | Sponsor Finance(1) | Asset-based Lending(2) | Equipment Finance(3) | Life Science Finance | Total Comprehensive Investment Portfolio Activity | ||||||
| Originations | |||||||||||
| Repayments / Amortization | |||||||||||
| Net Portfolio Activity | $21.4 | $256.0 | $27.9 | $(4.5) | $ 300.8 | ||||||
(1) Sponsor Finance refers to cash flow loans to sponsor-owned companies including cash flow loans held in the SLR Senior Lending Program LLC attributable to the Company.
(2) Includes SLR-CS, SLR-BC and SLR-HC ABL’s full portfolios, as well as asset-based loans on the Company’s balance sheet.
(3) Includes SLR-EF’s full portfolio and equipment financings on the Company’s balance sheet and Kingsbridge Holdings’ (KBH) full portfolio.
Portfolio Composition
SLRC’s Comprehensive Investment Portfolio composition by asset class at December 31, 2022 was as follows:
| Comprehensive Investment Portfolio Composition (at fair value) | Amount | Weighted Average Asset Yield(5) | ||||
| ($mm) | % | |||||
| Senior Secured Investments Cash Flow Loans (Sponsor Finance)(1) | ||||||
| Asset-Based Loans(2) | ||||||
| Equipment Financings(3) | ||||||
| Life Science Loans | ||||||
| Total Senior Secured Investments | $2,943.7 | 99.8% | 12.2% | |||
| Equity and Equity-like Securities | ||||||
| Total Comprehensive Investment Portfolio | $2,948.6 | 100.0% | ||||
| Floating Rate Investments(4) | ||||||
| First Lien Senior Secured Loans | ||||||
| Second Lien Senior Secured Cash Flow Loans | ||||||
| Second Lien Senior Secured Asset-Based Loans | ||||||
(1) Includes cash flow loans held in the SLR Senior Lending Program LLC (“SSLP”) attributable to the Company and excludes the Company’s equity investment in SSLP.
(2) Includes SLR-CS, SLR-BC, and SLR-HC ABL’s full portfolios, as well as asset-based loans on the Company’s balance sheet, and excludes the Company’s equity investments in each of SLR-CS, SLR-BC, and SLR-HC ABL.
(3) Includes SLR-EF’s full portfolio and equipment financings on the Company’s balance sheet and Kingsbridge Holdings’ (KBH) full portfolio. Excludes the Company’s equity and debt investments in each of SLR-EF and KBH.
(4) Floating rate investments are calculated as a percent of the Company’s income-producing Comprehensive Investment Portfolio. The majority of fixed rate loans are associated with SLR-EF and leases held by KBH. Additionally, SLR-EF and KBH seek to match-fund their fixed rate assets with fixed rate liabilities.
(5) The weighted average asset yield for cash flow, asset-based and life science loans on balance sheet is based on a yield to maturity calculation. The yield calculation of Life Science loans excludes the impact of success fees and/or warrants. The weighted average yield for on-balance sheet equipment financings is calculated based on the expected average life of the investments. The weighted average asset yield for SLR-CS asset-based loans is an Internal Rate of Return calculated using actual cash flows received and the expected terminal value. The weighted average asset yield for SLR-BC and SLR-HC ABL represents total interest and fee income for the three-month period ending on December 31, 2022 against the average portfolio over the same fiscal period, annualized. The weighted average asset yield for SLR-EF represents total interest and fee income for the three-month period ending on December 31, 2022 against the portfolio as of December 31, 2022, annualized. The weighted average yield for the KBH equipment leasing portfolio represents the expected return on equity during 2022.
The Comprehensive Investment Portfolio is diversified across approximately 800 unique issuers operating in over 120 industries, with an average exposure of
At December 31, 2022,
SLR Investment Corp. Portfolio
Asset Quality
As of December 31, 2022,
The Company puts its largest emphasis on risk control and credit performance. On a quarterly basis, or more frequently if deemed necessary, the Company formally rates each portfolio investment on a scale of one to four, with one representing the least amount of risk.
As of December 31, 2022, the composition of our portfolio, on a risk ratings basis, was as follows:
| Internal Investment Rating | Investments at Fair Value ($mm) | % of Total Portfolio | |
| 1 | |||
| 2 | |||
| 3 | |||
| 4 | |||
SLR Investment Corp.’s Results of Operations for the Fiscal Year Ended December 31, 2022 compared to the Fiscal Year Ended December 31, 2021.
Investment Income
For the fiscal years ended December 31, 2022 and 2021, gross investment income totaled
| Investment Income Contribution by Asset Class(1) ($mm) | |||||
| For the Year Ended: | Sponsor Finance | Asset-based Lending | Equipment Finance | Life Science Finance | Total ($mm) |
| 12/31/2022 | $177.5 | ||||
| % Contribution | 100.0% | ||||
(1) Investment Income Contribution by Asset Class includes: interest income/fees from Sponsor Finance (cash flow) loans on balance sheet and distributions from SSLP; income/fees from asset-based loans on balance sheet and distributions from SLR-CS, SLR-BC, SLR-HC ABL; income/fees from equipment financings and distributions from SLR-EF and distributions from KBH; and income/fees from life science loans on balance sheet, and excludes investment income contribution by asset class from SLR Senior Investment Corp. in Q1 2022.
Expenses
SLRC’s net expenses totaled
Net Investment Income
SLRC’s net investment income totaled
Net Realized and Unrealized Loss
Net realized and unrealized loss for the fiscal years ended December 31, 2022 and 2021 totaled approximately
Net Increase in Net Assets Resulting from Operations
For the fiscal years ended December 31, 2022 and 2021, SLRC had a net increase in net assets resulting from operations of
Liquidity and Capital Resources
Unsecured Debt
At December 31, 2022, approximately
Credit Facilities and Available Capital
At December 31, 2022, the Company had
Leverage
On December 31, 2022, the Company’s net debt-to-equity was 1.08x, which is approximately in the middle of its target leverage ratio of 0.9x – 1.25x.
Unfunded Commitments
At December 31, 2022, excluding commitments to SLR-CS, SLR-EF, SLR-HC ABL, and SSLP over which the Company controls such funding, the Company had unfunded commitments of approximately
Other Events
SLR Senior Lending Program LLC
On October 12, 2022, the Company entered into an amended and restated limited liability company agreement with Sunstone Senior Credit L.P. (the “Investor”) to create a joint venture vehicle, SLR Senior Lending Program LLC (“SSLP”). SSLP is expected to invest primarily in senior secured cash flow loans. The Company and the Investor each have made equity commitments of
On December 1, 2022, SSLP commenced operations. On December 12, 2022, SSLP entered into a
Stock Repurchase Program
On May 3, 2022, the Company’s Board authorized a program for the purpose of repurchasing up to
Subsequent Events
Distributions
On February 28, 2023, the Company’s Board of Directors declared a monthly distribution of
Financial Statements and Tables
SLR INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except share amounts)
| December 31, 2022 | December 31, 2021 | |||||
| Assets | ||||||
| Investments at fair value: | ||||||
| Companies less than | $ | 1,289,082 | $ | 964,379 | ||
| Companies more than | 797,594 | 706,203 | ||||
| Cash | 10,743 | 2,935 | ||||
| Cash equivalents (cost: | 417,590 | 320,000 | ||||
| Dividends receivable | 11,192 | 9,028 | ||||
| Interest receivable | 9,706 | 6,521 | ||||
| Receivable for investments sold | 1,124 | 1,378 | ||||
| Prepaid expenses and other assets | 664 | 567 | ||||
| Total assets | $ | 2,537,695 | $ | 2,011,011 | ||
| Liabilities | ||||||
| Debt ( | $ | 1,085,998 | $ | 812,038 | ||
| Payable for investments and cash equivalents purchased | 417,611 | 320,041 | ||||
| Distributions payable | 7,481 | 17,327 | ||||
| Management fee payable | 7,964 | 7,435 | ||||
| Performance-based incentive fee payable | 5,422 | 1,864 | ||||
| Interest payable | 7,943 | 4,492 | ||||
| Administrative services payable | 1,488 | 2,689 | ||||
| Other liabilities and accrued expenses | 4,057 | 2,844 | ||||
| Total liabilities | $ | 1,537,964 | $ | 1,168,730 | ||
| Net Assets | ||||||
| Common stock, par value | $ | 546 | $ | 423 | ||
| Paid-in capital in excess of par | 1,162,569 | 936,999 | ||||
| Accumulated distributable net loss | (163,384 | ) | (95,141 | ) | ||
| Total net assets | $ | 999,731 | $ | 842,281 | ||
| Net Asset Value Per Share | $ | 18.33 | $ | 19.93 | ||
SLR INVESTMENT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share amounts)
| Year ended December 31, | |||||||
| 2022 | 2021 | ||||||
| INVESTMENT INCOME: | |||||||
| Interest: | |||||||
| Companies less than | $ | 121,491 | $ | 86,122 | |||
| Companies more than | 9,515 | 11,354 | |||||
| Dividends: | |||||||
| Companies less than | — | 133 | |||||
| Companies more than | 44,383 | 37,564 | |||||
| Other income: | |||||||
| Companies less than | 2,116 | 4,157 | |||||
| Companies more than | — | 24 | |||||
| Total investment income | 177,505 | 139,354 | |||||
| EXPENSES: | |||||||
| Management fees | 29,982 | 28,277 | |||||
| Performance-based incentive fees | 15,097 | 10,309 | |||||
| Interest and other credit facility expenses | 46,087 | 29,876 | |||||
| Administrative services expense | 5,401 | 5,575 | |||||
| Other general and administrative expenses | 6,099 | 4,390 | |||||
| Total expenses | 102,666 | 78,427 | |||||
| Performance-based incentive fees waived | (1,527 | ) | — | ||||
| Net expenses | 101,139 | 78,427 | |||||
| Net investment income | $ | 76,366 | $ | 60,927 | |||
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND CASH EQUIVALENTS: | |||||||
| Net realized gain (loss) on investments and cash equivalents (companies less than | $ | (36,485 | ) | $ | 26 | ||
| Net change in unrealized gain (loss) on investments and cash equivalents: | |||||||
| Companies less than | (2,909 | ) | (10,500 | ) | |||
| Companies more than | (18,630 | ) | 9,113 | ||||
| Net change in unrealized loss on investments and cash equivalents | (21,539 | ) | (1,387 | ) | |||
| Net realized and unrealized loss on investments and cash equivalents | (58,024 | ) | (1,361 | ) | |||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 18,342 | $ | 59,566 | |||
| EARNINGS PER SHARE | $ | 0.35 | $ | 1.41 | |||
About SLR Investment Corp.
SLR Investment Corp. is a closed-end investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940. A specialty finance company with expertise in several niche markets, the Company primarily invests in leveraged, U.S. upper middle market companies in the form of cash flow, asset-based, and life sciences senior secured loans.
Forward-Looking Statements
Some of the statements in this press release constitute forward-looking statements because they relate to future events, future performance or financial condition. The forward-looking statements may include statements as to: an increase in the size of SLRC’s income producing comprehensive portfolio; the market environment and its impact on the business prospects of SLRC and the prospects of SLRC’s portfolio companies; prospects for additional portfolio growth of SLRC; and the impact on the performance of SLRC from the investments that SLRC has made and expects to make. In addition, words such as “anticipate,” “believe,” “expect,” “seek,” “plan,” “should,” “estimate,” “project” and “intend” indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this press release involve risks and uncertainties. Certain factors could cause actual results and conditions to differ materially from those projected, including the uncertainties associated with: (i) changes in the economy, financial markets and political environment, including the impacts of inflation and rising interest rates; (ii) risks associated with possible disruption in the operations of SLRC or the economy generally due to terrorism, war or other geopolitical conflicts (including the current conflict between Russia and Ukraine), natural disasters or pandemics; (iii) future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities); (iv) conditions in SLRC’s operating areas, particularly with respect to business development companies or regulated investment companies; and (v) other considerations that may be disclosed from time to time in SLRC’s publicly disseminated documents and filings. SLRC has based the forward-looking statements included in this press release on information available to it on the date of this press release, and SLRC assumes no obligation to update any such forward-looking statements. Although SLRC undertakes no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that it may make directly to you or through reports that SLRC in the future may file with the Securities and Exchange Commission, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
Contact
SLR Investment Corp.
Investor Relations
(646) 308-8770
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