SLR Investment Corp. Announces Quarter Ended September 30, 2022 Financial Results;
SLR Investment Corp. (SLRC) reported a net investment income of $20 million ($0.37 per share) for Q3 2022, consistent with the previous quarter. As of September 30, 2022, the net asset value per share was $18.37 with a total investment portfolio of $2.9 billion. The company declared a monthly distribution of $0.136667 per share payable on December 1, 2022. Notably, total originations reached $393.9 million with a net portfolio growth of 9%. Despite a net loss of $6.5 million from investments, the firm remains optimistic about future performance.
- Net investment income of $20 million, consistent with Q2 2022.
- Total originations of $393.9 million, supporting portfolio growth.
- Monthly distribution of $0.136667 per share declared, reflecting commitment to returns.
- Net realized and unrealized loss of $6.5 million during the quarter.
- Earnings per share decreased to $0.25 from $0.32 year-over-year.
Reports
NEW YORK, Nov. 02, 2022 (GLOBE NEWSWIRE) -- SLR Investment Corp. (NASDAQ: SLRC) (the “Company” or “SLRC”), today reported net investment income of
At September 30, 2022, net asset value (NAV) was
For the quarter ended September 30, 2022, the Company paid monthly distributions totaling
On November 2, 2022, the Company’s Board of Directors (the “Board”) declared a monthly distribution of
HIGHLIGHTS:
At September 30, 2022:
Comprehensive Investment Portfolio* fair value:
Number of portfolio companies: >785
Net assets:
Net asset value per share:
Net debt-to-equity: 1.14x
Comprehensive Investment Portfolio Activity** for the Quarter Ended September 30, 2022:
Investments made during the quarter:
Investments prepaid and sold during the quarter:
Operating Results for the Quarter Ended September 30, 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 ended September 30, 2022 is comprised of SLRC’s investment portfolio and the full portfolios of SLR Credit Solutions (“SLR-CS”), SLR Equipment Finance (“SLR-EF”), Kingsbridge Holdings, LLC (“KBH”), SLR Business Credit (“SLR-BC”) and SLR Healthcare ABL (“SLR-HC ABL”) owned by the Company (collectively, the Company’s “Commercial Finance Portfolio Companies”), and excludes the Company’s fair value of the equity interests in the Commercial Finance Portfolio Companies and the Company’s loans to SLR-EF and KBH.
** Comprehensive Investment Portfolio Activity for the quarter ended September 30, 2022 includes the gross originations through the Company’s Commercial Finance Portfolio Companies.
“The combination of portfolio growth, merger synergies, and the increase in yields will drive solid growth to our net investment income and we therefore expect to cover our distribution for Q4,” said Michael Gross, Co-CEO of SLR Investment Corp. “SLRC is on an accelerated path to covering its distributions sooner than we had projected at the time of the merger with SUNS earlier this year.”
“The current private credit investment environment is more attractive than we have seen in several years,” said Bruce Spohler, Co-CEO of SLR Investment Corp. “Our investment strategies focused on first lien cash flow and specialty finance loans are well-positioned to thrive in the current market.”
Conference Call and Webcast
The Company will host an earnings conference call and audio webcast at 10:00 a.m. (Eastern Time) on Thursday, November 3, 2022. 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: SLRC3Q22. A telephone replay will be available until November 17, 2022 and can be accessed by dialing (800) 753-5479. International callers should dial (402) 220-2675.
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
Investment Activity
During the three months ended September 30, 2022, SLRC had total originations of
The investment activity of our Comprehensive Investment Portfolio by asset class for the quarter ended September 30, 2022 was as follows:
Asset Class | Sponsor Finance(1) | Asset-based Lending(2) | Equipment Finance(3) | Life Science Finance | Total Comprehensive Investment Portfolio Activity | |||||
Originations | 102.4 | |||||||||
Repayments / Amortization | ||||||||||
Net Portfolio Activity | $68.4 | $112.8 | $10.8 | $42.9 | $234.9 |
(1) Sponsor Finance refers to cash flow loans to sponsor-owned companies.
(2) Includes SLR-CS, SLR-BC and SLR-HC ABL’s full portfolios, as well as asset-based loans on the Company’s balance sheet.
(3) Includes SLR-EF’s full portfolio and equipment financings on the Company’s balance sheet and Kingsbridge Holdings’ (KBH) full portfolio.
Portfolio Composition
SLRC’s Comprehensive Investment Portfolio composition by asset class at September 30, 2022 was as follows:
Comprehensive Investment Portfolio Composition | Amount | Weighted Average Asset | ||
(at fair value) | ($mm) | % | Yield(4) | |
Senior Secured Investments | ||||
Cash Flow Loans (Sponsor Finance) | ||||
Asset-Based Loans(1) | ||||
Equipment Financings(2) | ||||
Life Science Loans | ||||
Total Senior Secured Investments | $2,924.9 | 99.8% | 11.3% | |
Equity and Equity-like Securities | ||||
Total Comprehensive Investment Portfolio | $2,930.3 | 100.0% | ||
Floating Rate Investments(3) | ||||
First Lien Senior Secured Loans | ||||
Second Lien Senior Secured Cash Flow Loans | ||||
Second Lien Senior Secured Asset-Based Loans |
(1) 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.
(2) 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.
(3) 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.
(4) 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 September 30, 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 September 30, 2022 against the portfolio as of September 30, 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 over 785 unique borrowers in over 100 industries and with an average exposure of
At September 30, 2022,
The weighted average yield at fair value of the income-producing investments in the Comprehensive Investment Portfolio was
SLR Investment Corp. Portfolio
Asset Quality
As of September 30, 2022, on a fair value basis,
The Company puts its greatest emphasis on risk mitigation 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 September 30, 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 |
Investment Income Contribution by Asset Class(1)
For the Quarter Ended: | Sponsor Finance | Asset-based Finance | Equipment Finance | Life Science Finance | Total ($mm) |
9/30/2022 | 16.1 | 12.8 | 9.2 | 9.5 | 47.6 |
% Contribution | 33.9 | 26.9 | 19.3 | 19.9 |
(1) Investment Income Contribution by Asset Class includes: interest income/fees from Sponsor Finance (cash flow) loans on balance sheet; income/fees from Asset-based loans on balance sheet and distributions from SLR-CS, SLR-BC and SLR-HC ABL; income/fees from equipment financings on balance sheet and distributions from SLR-EF and distributions from KBH; and income/fees from life science loans on balance sheet.
SLR Investment Corp.’s Results of Operations for the Quarter Ended September 30, 2022 compared to the Quarter Ended September 30, 2021.
Investment Income
For the fiscal quarters ended September 30, 2022 and 2021, gross investment income totaled
Expenses
Net expenses totaled
Net Investment Income
The Company’s net investment income totaled
Net Realized and Unrealized Loss
Net realized and unrealized losses for the fiscal quarters ended September 30, 2022 and 2021 totaled
Net Increase in Net Assets Resulting from Operations
For the quarters ended September 30, 2022 and 2021, the Company had a net increase in net assets resulting from operations of
Liquidity and Capital Resources
Credit Facilities and Available Capital
At September 30, 2022, the Company had
Leverage
On September 30, 2022, the Company’s net debt-to-equity was 1.14x. SLRC’s current leverage provides a significant cushion to its regulatory asset coverage limit of 2.0x debt-to-equity as well as its target leverage ratio of 0.9x – 1.25x.
Share Repurchase Program
On May 3, 2022, SLRC’s Board authorized the Company to adopt a program for the purpose of repurchasing up to
Subsequent Events
Joint Venture Agreement
On October 12, 2022, the Company entered into a joint venture agreement with SunStone Senior Credit L.P. (the “Investor”) to create SLR Senior Lending Program LLC (“SSLP”). The joint venture is expected to invest primarily in senior secured cash flow loans. The Company and the Investor each have made initial equity commitments of
Distributions
On October 5, 2022, our Board declared a monthly distribution of
On November 2, 2022, the Company’s Board of Directors (the “Board”) declared a monthly distribution of
The specific tax characteristics of the distributions will be reported to stockholders on Form 1099 after the end of the calendar year.
Financial Statements and Tables
SLR Investment Corp.
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except share amounts)
September 30, 2022 (unaudited) | December 31, 2021 | ||||||
Assets | |||||||
Investments at fair value: | |||||||
Companies less than | $ | 1,368,827 | $ | 964,379 | |||
Companies more than | 786,534 | 706,203 | |||||
Cash | 7,983 | 2,935 | |||||
Cash equivalents (cost: | 268,931 | 320,000 | |||||
Dividends receivable | 11,542 | 9,028 | |||||
Interest receivable | 9,456 | 6,521 | |||||
Receivable for investments sold | 1,276 | 1,378 | |||||
Prepaid expenses and other assets | 886 | 567 | |||||
Total assets | $ | 2,455,435 | $ | 2,011,011 | |||
Liabilities | |||||||
Debt ( | $ | 1,148,291 | $ | 812,038 | |||
Payable for investments and cash equivalents purchased | 268,952 | 320,041 | |||||
Distributions payable | 7,486 | 17,327 | |||||
Management fee payable | 7,890 | 7,435 | |||||
Performance-based incentive fee payable | 4,771 | 1,864 | |||||
Interest payable | 7,083 | 4,492 | |||||
Administrative services payable | 1,293 | 2,689 | |||||
Other liabilities and accrued expenses | 3,444 | 2,844 | |||||
Total liabilities | $ | 1,449,210 | $ | 1,168,730 | |||
Net Assets | |||||||
Common stock, par value | $ | 548 | $ | 423 | |||
Paid-in capital in excess of par | 1,163,713 | 936,999 | |||||
Accumulated distributable net loss | (158,036 | ) | (95,141 | ) | |||
Total net assets | $ | 1,006,225 | $ | 842,281 | |||
Net Asset Value Per Share | $ | 18.37 | $ | 19.93 | |||
SLR Investment Corp.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except share amounts)
Three months ended | |||||||
September 30, 2022 | September 30, 2021 | ||||||
INVESTMENT INCOME: | |||||||
Interest: | |||||||
Companies less than | $ | 32,933 | $ | 19,202 | |||
Companies more than | 2,431 | 2,834 | |||||
Dividends: | |||||||
Companies more than | 11,969 | 9,078 | |||||
Other income: | |||||||
Companies less than | 234 | 1,044 | |||||
Companies more than | — | 5 | |||||
Total investment income | 47,567 | 32,163 | |||||
EXPENSES: | |||||||
Management fees | $ | 7,890 | $ | 7,142 | |||
Performance-based incentive fees | 4,965 | 698 | |||||
Interest and other credit facility expenses | 12,784 | 7,127 | |||||
Administrative services expense | 1,132 | 1,435 | |||||
Other general and administrative expenses | 935 | 755 | |||||
Total expenses | 27,706 | 17,157 | |||||
Performance-based incentive fees waived | (194 | ) | — | ||||
Net expenses | 27,512 | 17,157 | |||||
Net investment income | $ | 20,055 | $ | 15,006 | |||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND CASH EQUIVALENTS: | |||||||
Net realized loss on investments and cash equivalents (companies less than | $ | (37,326 | ) | $ | (127 | ) | |
Net change in unrealized gain (loss) on investments and cash equivalents: | |||||||
Companies less than | 28,783 | (6,507 | ) | ||||
Companies more than | 2,016 | 4,999 | |||||
Net change in unrealized gain (loss) on investments and cash equivalents | 30,799 | (1,508 | ) | ||||
Net realized and unrealized loss on investments and cash equivalents | (6,527 | ) | (1,635 | ) | |||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 13,528 | $ | 13,371 | |||
EARNINGS PER SHARE | $ | 0.25 | $ | 0.32 | |||
About SLR Investment Corp.
SLR Investment Corp. is a closed-end investment company that has elected to be treated 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: future operating results of SLRC and distribution projections; business prospects of SLRC and the prospects of its portfolio companies; and the impact of the investments that SLRC 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) the expected synergies and savings associated with the two-step merger of SUNS with and into SLRC (the “Merger”); (ii) the ability to realize the anticipated benefits of the Merger, including the expected elimination of certain expenses and costs due to the Merger; (iii) changes in the economy, financial markets and political environment; (iv) risks associated with possible disruption in the operations of SLRC or the economy generally due to terrorism, natural disasters or the COVID-19 pandemic; (v) future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities); (vi) conditions in SLRC’s operating areas, particularly with respect to business development companies or regulated investment companies; (vii) general considerations associated with the COVID-19 pandemic; and (viii) 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
FAQ
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