Financial Data and Key Metrics Changes - SWK Holdings reported a GAAP pretax net income of $5.8 million or $0.48 per diluted share for Q1 2025, with a net income of $4.5 million after tax expenses [12] - The non-GAAP tangible book value per share increased to $21.73, a 10.5% rise from $19.66 in Q1 2024 [13] - Overall operating expenses decreased to $3.7 million in Q1 2025 from $10.3 million in Q1 2024, primarily due to a significant reduction in provisions for credit losses [13][14] Business Line Data and Key Metrics Changes - The finance segment adjusted non-GAAP net income for Q1 2025 was $8.6 million, contributing to a trailing twelve-month total of $26 million [5] - The Mod three CDMO division reported segment revenue of $1 million with an EBITDA loss of $0.5 million for Q1 2025 [10] - The finance receivables segment experienced a $300,000 decrease in revenue year-over-year, primarily due to a $2.4 million decrease in interest and fees earned [12] Market Data and Key Metrics Changes - As of March 31, 2025, the gross finance receivables portfolio consisted of approximately $220 million in performing first lien loans and $13 million in non-accruals [6] - The effective yield on the finance receivable portfolio was 14.5%, expected to generate approximately $32 million in annual interest income if repayments occur as modeled [7][9] Company Strategy and Development Direction - The company aims to maintain a high-quality portfolio that can earn mid-teens returns while pursuing additional financing opportunities [8] - Management is focused on simplifying the business and ensuring appropriate returns on equity capital, with plans for a new share repurchase program [5][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's strength and noted that ongoing healthcare and economic regulatory changes do not pose significant risks [9] - The current pipeline for loans is considered neutral, with modest opportunities available, particularly for smaller companies struggling to secure capital [48] Other Important Information - The company repurchased approximately 52,000 shares at a total cost of $900,000 during the quarter, with additional repurchases post-quarter [15] - The company holds $5 million in public equities and warrants, as well as private warrants and contingent economic interests carried at zero on the books [6][31] Q&A Session Summary Question: Inquiry about the two loans rated number two on credit - Management confirmed that both are first lien term loans, while three non-accruals are defined as post-reorganization royalties [20][22] Question: Discussion on competition in the private credit space - Management acknowledged increased competition but emphasized the importance of being proactive and creative in proposals to maintain a high-quality portfolio [25][27] Question: Best use of capital at this point - Management indicated that buying back stock is a great use of capital, alongside paying special dividends and selectively pursuing additional loans [44][46] Question: Current pipeline of possible loans compared to previous quarters - Management described the current loan pipeline as neutral, with modestly worse opportunities sequentially compared to the previous year [48]

Financial Data and Key Metrics Changes - SWK Holdings reported a GAAP pretax net income of $5.8 million or $0.48 per diluted share for Q1 2025, with a net income of $4.5 million after tax expenses [12] - The non-GAAP tangible book value per share increased to $21.73, reflecting a 10.5% year-over-year growth [13] - Overall operating expenses decreased to $3.7 million in Q1 2025 from $10.3 million in Q1 2024, primarily due to a significant reduction in provision for credit losses [13][14] Business Line Data and Key Metrics Changes - The finance segment adjusted non-GAAP net income for Q1 2025 was $8.6 million, contributing to a trailing twelve-month total of $26 million [5] - The Mod three CDMO division reported segment revenue of $1 million with an EBITDA loss of $0.5 million [10] - The finance receivables portfolio had an effective yield of 14.5%, expected to generate approximately $32 million in annual interest income if repayments occur as modeled [6][9] Market Data and Key Metrics Changes - The gross finance receivables portfolio consisted of approximately $220 million in performing first lien loans and $13 million in non-accruals, with a CECL reserve of $9 million [6] - The company continues to monitor healthcare and economic regulatory changes, currently assessing that these do not pose significant risks to the portfolio [9] Company Strategy and Development Direction - The company aims to simplify its business and focus on generating appropriate returns on equity capital, with plans for a new share repurchase program due to excess capital [5][16] - Management is pursuing additional financing opportunities while maintaining a high-quality portfolio that can yield mid-teens returns [7][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for a successful 2025, emphasizing the importance of proactive partnerships and customer service in a competitive market [16] - The current pipeline for loans is considered neutral, with modest opportunities available, particularly for smaller companies struggling to secure capital [46][48] Other Important Information - The company repurchased approximately 52,000 shares at a total cost of $900,000 during the quarter, with additional repurchases post-quarter [15] - The company holds $5 million in public equities and warrants, as well as private warrants and contingent economic interests carried at zero on the books [6][31] Q&A Session Summary Question: Inquiry about credit scoring and loan types - Management clarified that the two loans mentioned are first lien term loans, while the three non-accruals are defined as post-reorganization royalties [19][20] Question: Discussion on competition in the private credit space - Management acknowledged increased competition but emphasized the need for creativity and excellent customer service to secure loans in a crowded market [23][25] Question: Best use of capital at this point - Management indicated that buying back stock is a strong option, alongside paying dividends and selectively pursuing additional loans [42][44] Question: Current pipeline of possible loans compared to previous quarters - Management noted that the current loan pipeline is neutral, with modestly worse opportunities sequentially compared to the previous year [46][48]

[Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) SWK Holdings reported strong Q1 2025 financial results, driven by significant net income growth and increased tangible book value [First Quarter 2025 Financial Results](index=1&type=section&id=First%20Quarter%202025%20Financial%20Results) SWK Holdings reported Q1 2025 GAAP net income of **$4.5 million** and a **10.5%** increase in non-GAAP tangible book value per share Q1 2025 vs Q1 2024 Key Financial Metrics | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $11.8 million | $11.4 million | +3.5% | | GAAP Net Income | $4.5 million | $0.5 million | +800% | | GAAP Diluted EPS | $0.37 | $0.04 | +825% | | Finance Receivables Segment Adjusted Non-GAAP Net Income | $8.6 million | $2.3 million | +274% | | GAAP Book Value Per Share | $23.94 | $22.42 | +6.8% | | Non-GAAP Tangible Financing Book Value Per Share | $21.73 | $19.66 | +10.5% | - The **$0.4 million** increase in total revenue was primarily due to a **$0.7 million** increase in Pharmaceutical Development segment revenue, which offset a **$0.3 million** decrease in Finance Receivables segment revenue[5](index=5&type=chunk) - CEO Jody Staggs noted that following a royalty monetization, the company's non-cash assets include approximately **$231.9 million** of gross finance receivables with a **14.5%** effective yield, plus **$4.7 million** in public equities and warrants, and the MOD3 Pharma division[4](index=4&type=chunk) - After the quarter closed, SWK monetized the majority of its royalty portfolio for approximately book value and subsequently paid a **$4.00 per share** dividend[8](index=8&type=chunk) [Portfolio Analysis](index=2&type=section&id=Portfolio%20Analysis) SWK's Q1 2025 portfolio activity included new loan commitments, significant royalty monetizations, and increased effective yield [Portfolio Status and Key Metrics](index=2&type=section&id=Portfolio%20Status%20and%20Key%20Metrics) SWK's Q1 2025 portfolio saw a new **$15.0 million** loan, a **$34.0 million** royalty sale, and an effective yield increase to **14.5%** - Key portfolio activities during the first quarter included: - A new **$15.0 million** term loan commitment to ImpediMed - An agreement to sell the majority of the royalty portfolio for **$34.0 million**, which closed in April 2025 - A final payment of **$12.2 million** from MolecuLight, satisfying its obligation - A **$17.3 million** payment from ANI Pharmaceuticals to buy out the Iluvien royalty[12](index=12&type=chunk) Portfolio Yields (Q1 2025 vs Q1 2024) | Yield Type | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Effective Yield | 14.5% | 14.2% | +30 bps | | Realized Yield | 15.5% | 16.3% | -80 bps | - As of March 31, 2025, the company had three finance receivables on nonaccrual status with a total carrying value of **$12.7 million**: Flowonix (**$7.4M**), Best ABT (**$2.3M**), and Ideal Implant (**$3.0M**)[14](index=14&type=chunk) Total Portfolio Investment Activity (in thousands) | | Three Months Ended March 31, 2025 | | :--- | :--- | | Beginning Portfolio | $ 282,706 | | Investment in finance receivables | 10,000 | | Paydowns received on investments & royalties | (32,693) | | Finance receivables held for sale | (31,678) | | Ending Portfolio | $ 227,776 | [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) This section details reconciliations of GAAP to non-GAAP financial measures, including adjusted net income and tangible book value [Reconciliation of GAAP to Non-GAAP Adjusted Net Income](index=3&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Adjusted%20Net%20Income) Non-GAAP adjusted net income for Q1 2025 reached **$8.1 million**, reflecting adjustments for non-cash items and one-time events Reconciliation to Non-GAAP Net Income (in thousands) | | Three Months Ended March 31, | | | :--- | :--- | :--- | | | **2025** | **2024** | | **Net income (GAAP)** | **$4,539** | **$468** | | Add: Loss on revaluation of finance receivables held for sale | $3,727 | — | | Add: Income tax expense | $1,278 | $229 | | Subtract: Realized gain on asset payoff | ($1,729) | — | | Other adjustments | $298 | $430 | | **Non-GAAP net income** | **$8,113** | **$1,137** | - Management adjusts for non-cash items such as changes in fair-market value of equities and warrants, income taxes (due to substantial NOLs), amortization, and foreign currency gains/losses to provide a clearer view of ongoing operations[16](index=16&type=chunk)[22](index=22&type=chunk) [Reconciliation to Finance Receivables Adjusted Non-GAAP Net Income](index=3&type=section&id=Reconciliation%20to%20Finance%20Receivables%20Adjusted%20Non-GAAP%20Net%20Income) Finance Receivables segment adjusted non-GAAP net income increased to **$8.6 million** in Q1 2025, isolating core business profitability Finance Receivables Segment Adjusted Non-GAAP Net Income (in thousands) | | Three Months Ended March 31, | | | :--- | :--- | :--- | | | **2025** | **2024** | | **Non-GAAP net income** | **$8,113** | **$1,137** | | Add: MOD3 operating loss, excluding amortization | $536 | $1,166 | | **Finance Receivables segment adjusted non-GAAP net income** | **$8,649** | **$2,303** | - This non-GAAP measure is designed to show the profitability of the core Finance Receivables segment by eliminating the operating results of the MOD3 pharmaceutical development segment[18](index=18&type=chunk)[23](index=23&type=chunk) [Reconciliation of GAAP to Non-GAAP Tangible Finance Book Value Per Share](index=4&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Tangible%20Finance%20Book%20Value%20Per%20Share) Non-GAAP tangible financing book value per share rose **10.5%** to **$21.73**, reflecting adjustments for non-core assets Non-GAAP Tangible Finance Book Value Per Share Reconciliation | | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | **GAAP book value per share** | **$23.94** | **$22.42** | | Less: Deferred tax assets, net | ($1.82) | ($2.25) | | Less: Intangible assets, net & MOD3 PP&E | ($0.40) | ($0.90) | | Plus: Contingent consideration payable | $0.00 | $0.39 | | **Non-GAAP Tangible book value per share** | **$21.73** | **$19.66** | - Management views non-GAAP tangible financing book value per share as a relevant metric to value the Company's core finance receivable business by removing deferred tax assets and the net asset value of the MOD3 division[11](index=11&type=chunk)[23](index=23&type=chunk) [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated balance sheets, income statements, and cash flow statements [Unaudited Condensed Consolidated Balance Sheets](index=6&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Total assets were **$331.3 million** as of March 31, 2025, reflecting increased cash, reclassified finance receivables, and reduced liabilities Selected Balance Sheet Data (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $29,809 | $5,927 | | Finance receivables, net | $223,076 | $277,760 | | Finance receivables... held for sale | $33,990 | $0 | | **Total assets** | **$331,264** | **$332,235** | | Revolving credit facility | $0 | $6,233 | | **Total liabilities** | **$38,595** | **$43,545** | | **Total stockholders' equity** | **$292,669** | **$288,690** | [Unaudited Condensed Consolidated Statements of Income](index=7&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) Q1 2025 total revenues reached **$11.8 million**, with net income significantly increasing to **$4.5 million** due to credit loss benefits and asset gains Selected Income Statement Data (in thousands) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total revenues | $11,832 | $11,360 | | Provision (benefit) for credit losses | ($1,465) | $5,297 | | Income from operations | $8,113 | $1,079 | | Realized gain on early payment of finance receivable | $1,729 | $0 | | Loss on revaluation of finance receivables held for sale | ($3,727) | $0 | | **Net income** | **$4,539** | **$468** | | **Diluted EPS** | **$0.37** | **$0.04** | [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) The company generated **$8.3 million** in operating cash flow and saw a **$23.9 million** net increase in cash during Q1 2025 Summary of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,280 | $4,430 | | Net cash provided by investing activities | $22,702 | $9,181 | | Net cash used in financing activities | ($7,100) | ($13,349) | | **Net increase in cash** | **$23,882** | **$262** | | **Cash at end of period** | **$29,809** | **$5,498** | [Other Information](index=4&type=section&id=Other%20Information) This section details the upcoming conference call and provides an overview of SWK Holdings' business model [Conference Call and Company Information](index=4&type=section&id=Conference%20Call%20and%20Company%20Information) SWK Holdings will host a Q1 2025 earnings call and operates as a life science specialty finance firm, including the MOD3 Pharma division - A conference call to discuss Q1 2025 results is scheduled for **May 16, 2025**, at **9:00 a.m. CST**[25](index=25&type=chunk) - SWK Holdings is a specialty finance company that provides non-dilutive financing (structured debt, royalty monetization) to commercial-stage healthcare companies, typically in amounts ranging from **$5.0 million** to **$25.0 million**[26](index=26&type=chunk) - The press release includes a Safe Harbor statement, cautioning that forward-looking statements involve risks and uncertainties and that actual results could differ materially[27](index=27&type=chunk)

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, along with management's discussion and analysis of financial condition and results of operations [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the quarter ended March 31, 2025. Key results include a net income of $4.5 million, a significant increase from $0.5 million in the prior-year quarter. Total assets slightly decreased to $331.3 million, while total liabilities decreased to $38.6 million. The company also entered into a definitive agreement to sell the majority of its finance receivables royalty portfolio for approximately $34.0 million, a transaction that closed after the quarter-end [Unaudited Condensed Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets%E2%80%94March%2031%2C%202025%20and%20December%2031%2C%202024) As of March 31, 2025, total assets were $331.3 million, a slight decrease from $332.2 million at year-end 2024. The change was driven by a decrease in finance receivables to $223.1 million, partially offset by a significant increase in cash and cash equivalents to $29.8 million. Total liabilities decreased to $38.6 million from $43.5 million, primarily due to the full repayment of the revolving credit facility. Stockholders' equity increased to $292.7 million Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $29,809 | $5,927 | | Finance receivables, net | $223,076 | $277,760 | | Finance receivables held for sale | $33,990 | $— | | **Total Assets** | **$331,264** | **$332,235** | | Revolving credit facility | $— | $6,233 | | **Total Liabilities** | **$38,595** | **$43,545** | | **Total Stockholders' Equity** | **$292,669** | **$288,690** | [Unaudited Condensed Consolidated Statements of Income](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income%E2%80%94Three%20Months%20Ended%20March%2031%2C%202025%20and%202024) For the first quarter of 2025, the company reported a net income of $4.5 million, or $0.37 per diluted share, a substantial increase from the $0.5 million, or $0.04 per diluted share, in the same period of 2024. The improvement was primarily driven by a $1.5 million benefit for credit losses (compared to a $5.3 million provision in Q1 2024) and a $1.7 million realized gain on early payment of a finance receivable. This was partially offset by a $3.7 million loss on the revaluation of finance receivables held for sale Q1 2025 vs Q1 2024 Income Statement (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $11,832 | $11,360 | | Provision (benefit) for credit losses | $(1,465) | $5,297 | | Income from operations | $8,113 | $1,079 | | Loss on revaluation of finance receivables held for sale | $(3,727) | $— | | Realized gain on early payment of finance receivable | $1,729 | $— | | **Net Income** | **$4,539** | **$468** | | **Diluted EPS** | **$0.37** | **$0.04** | [Unaudited Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%E2%80%94Three%20Months%20Ended%20March%2031%2C%202025%20and%202024) Total stockholders' equity increased from $288.7 million at the end of 2024 to $292.7 million as of March 31, 2025. The increase was primarily due to the $4.5 million net income for the quarter, partially offset by $0.9 million in common stock repurchases - Key changes in stockholders' equity for Q1 2025 included a **$4.5 million** increase from net income and a **$0.9 million** decrease from stock repurchases[14](index=14&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%E2%80%94Three%20Months%20Ended%20March%2031%2C%202025%20and%202024) The company generated $8.3 million in cash from operating activities in Q1 2025, up from $4.4 million in Q1 2024. Investing activities provided $22.7 million, largely from $32.7 million in repayments of finance receivables. Financing activities used $7.1 million, mainly for repaying the credit facility and stock repurchases. Overall, cash and cash equivalents increased by $23.9 million to end the quarter at $29.8 million Q1 2025 vs Q1 2024 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,280 | $4,430 | | Net cash provided by investing activities | $22,702 | $9,181 | | Net cash used in financing activities | $(7,100) | $(13,349) | | **Net increase in cash and cash equivalents** | **$23,882** | **$262** | | **Cash and cash equivalents at end of period** | **$29,809** | **$5,498** | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of accounting policies and financial statement line items. Key disclosures include the company's two reportable segments (Finance Receivables and Pharmaceutical Development), the sale of its royalty portfolio for ~$34.0 million which resulted in a $3.7 million loss, and an exclusive option granted to a partner to acquire assets of its MOD3 (Pharmaceutical Development) business. As of March 31, 2025, the company had $7.5 million in unfunded commitments - The company operates two reportable segments: "Finance Receivables" and "Pharmaceutical Development." The Pharmaceutical Development segment, formerly Enteris BioPharma, was renamed MOD3 Pharma on March 13, 2025[19](index=19&type=chunk)[22](index=22&type=chunk) - On March 19, 2025, the company agreed to sell the majority of its finance receivables royalty portfolio for approximately **$34.0 million**. This resulted in a pre-tax loss of **$3.7 million** recognized in Q1 2025. The transaction closed on April 10, 2025[60](index=60&type=chunk) - A strategic partner holds an exclusive option, exercisable by January 1, 2026, to acquire certain assets of the MOD3 (Pharmaceutical Development) business. These assets, valued at **$6.4 million**, have been classified as held for sale[62](index=62&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - As of March 31, 2025, the company had **$7.5 million** in unfunded commitments related to its royalty purchase and credit agreements[80](index=80&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the significant increase in Q1 2025 net income to a $6.8 million positive swing in the provision for credit losses and a $1.7 million gain on an early royalty payoff, which more than offset a $3.7 million loss on the revaluation of assets held for sale. The company's liquidity position strengthened considerably, with cash increasing to $29.8 million and the full repayment of its revolving credit facility. The finance receivables portfolio stood at $223.1 million at quarter-end [Finance Receivables Portfolio Overview](index=27&type=section&id=Finance%20Receivables%20Portfolio%20Overview) As of March 31, 2025, the company's total finance receivables portfolio, including assets held for sale, marketable investments, and warrant assets, had a GAAP balance of $270.6 million. The portfolio generated $10.7 million in revenue for the quarter. Several royalty assets are now classified as held for sale due to the pending transaction with Soleus Capital Finance Portfolio Summary as of March 31, 2025 (in thousands) | Category | GAAP Balance | YTD Revenue Recognized | | :--- | :--- | :--- | | Total finance receivables, gross | $231,861 | $8,688 | | Total finance receivables held for sale | $33,990 | $2,024 | | Total marketable investments | $455 | $— | | Total fair value of warrant assets | $4,245 | $— | | **Total** | **$270,551** | **$10,712** | - Several royalty investments, including those related to Forfivo XL®, Cambia®, and Iluvien®, are included in the finance receivables held for sale as of March 31, 2025[113](index=113&type=chunk) [Comparison of Results of Operations](index=29&type=section&id=Comparison%20of%20the%20three%20months%20ended%20March%2031%2C%202025%20and%202024) Comparing Q1 2025 to Q1 2024, net income rose by $4.0 million. This was primarily due to a $6.8 million decrease in the provision for credit losses (from a $5.3M provision to a $1.5M benefit). Total revenues saw a modest increase of $0.4 million. Other expenses increased by $1.9 million, mainly from the loss on revaluation of finance receivables held for sale Comparison of Q1 2025 vs Q1 2024 (in millions) | Item | Q1 2025 | Q1 2024 | Change $ | | :--- | :--- | :--- | :--- | | Revenues | $11.8 | $11.4 | $0.4 | | Provision (benefit) for credit losses | $(1.5) | $5.3 | $(6.8) | | General and administrative expense | $3.3 | $2.7 | $0.6 | | Other income (expense), net | $(2.3) | $(0.4) | $(1.9) | | **Net income** | **$4.5** | **$0.5** | **$4.0** | - The **$0.4 million** revenue increase was driven by a **$0.7 million** increase in Pharmaceutical Development revenue, partially offset by a **$0.3 million** decrease in Finance Receivables revenue[117](index=117&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity significantly improved, with cash and cash equivalents increasing by $23.9 million to $29.8 million at quarter-end. The company had no outstanding balance on its $60.0 million revolving credit facility, with $55.0 million available for borrowing after accounting for a liquidity covenant. The primary drivers of cash flow are income from its finance receivables and pharmaceutical development activities - As of March 31, 2025, cash and cash equivalents were **$29.8 million**, up from **$5.9 million** at December 31, 2024[125](index=125&type=chunk) - The company has a **$60.0 million** revolving credit facility. As of March 31, 2025, there was no outstanding balance, and **$55.0 million** was available for borrowing[126](index=126&type=chunk) - As of March 31, 2025, the company had **$7.5 million** in unfunded commitments[131](index=131&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to interest rate risk and inflation risk. The majority of its finance receivables portfolio consists of floating-rate instruments, which helps mitigate the impact of rising interest rates. The company does not currently use hedging instruments. Inflation poses a risk to its partner companies' financial health, which could in turn affect their ability to meet debt obligations - The company is subject to interest rate risk, as its income depends on the spread between the rates earned on its assets and the cost of its borrowings. Most of its finance receivables have floating interest rates[135](index=135&type=chunk)[136](index=136&type=chunk) - The company does not currently engage in any interest rate hedging activities[136](index=136&type=chunk) - Inflation could adversely affect the operating results of partner companies, potentially impacting their ability to pay interest and principal on loans and reducing the fair value of SWK's investments[138](index=138&type=chunk) [Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, with the participation of the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2025. There were no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[140](index=140&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[141](index=141&type=chunk) PART II. OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity sales, defaults, mine safety disclosures, and exhibits [Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is not currently involved in any legal proceedings that it expects to have a material effect on its business, financial condition, or results of operations - The company is not involved in any arbitration or other legal proceeding that it expects to have a material effect on its business, financial condition, results of operations, and cash flows[143](index=143&type=chunk) [Risk Factors](index=34&type=page&id=Item%201A.%20Risk%20Factors) There have been no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - No material changes from the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[144](index=144&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) During the first quarter of 2025, the company repurchased 52,337 shares of its common stock at an average price of $16.57 per share, for a total cost of approximately $0.9 million. As of March 31, 2025, approximately $4.5 million remained available for repurchase under the current program, which runs until May 16, 2025 Share Repurchases for Q1 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2025 | 17,010 | $16.28 | | Feb 2025 | 16,095 | $16.91 | | Mar 2025 | 19,232 | $16.55 | | **Total** | **52,337** | **$16.57** | - As of March 31, 2025, the maximum dollar value of shares that may yet be purchased under the current repurchase program was approximately **$4.5 million**[147](index=147&type=chunk) [Defaults Upon Senior Securities](index=34&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon its senior securities during the period - None[148](index=148&type=chunk) [Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not Applicable[149](index=149&type=chunk) [Other Information](index=35&type=section&id=Item%205.%20Other%20Information) On May 12, 2025, the company entered into amended and restated indemnification agreements with its directors and officers, providing them with contractual rights to indemnification and expense advancement - On May 12, 2025, each member of the Board of Directors and each officer entered into amended and restated indemnification agreements with the Company[150](index=150&type=chunk) [Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q. Notable new exhibits include the Purchase and Sale Agreement for the royalty portfolio sale, dated March 19, 2025, and new forms of indemnification agreements for directors and executive officers - Key exhibits filed include the Purchase and Sale Agreement with SCOF SPV I, LP, and new forms of indemnification agreements for directors and officers[152](index=152&type=chunk)

Core Insights - Stanley Black & Decker reported revenue of $3.74 billion for the quarter ended March 2025, a decrease of 3.2% year-over-year, but exceeded the Zacks Consensus Estimate by 0.37% [1] - The company's EPS was $0.75, up from $0.56 in the same quarter last year, representing a surprise of 10.29% over the consensus estimate of $0.68 [1] Financial Performance - Net Sales for Tools & Outdoor segment were $3.28 billion, slightly above the five-analyst average estimate of $3.26 billion, with a year-over-year change of -0.1% [4] - Normalized operating profit for Corporate overhead was reported at -$68.40 million, worse than the average estimate of -$60.80 million from four analysts [4] - Normalized operating profit for Tools & Outdoor was $314.20 million, exceeding the average estimate of $310.44 million from four analysts [4] Stock Performance - Shares of Stanley Black & Decker have declined by 19.5% over the past month, compared to a -0.2% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Company Performance - Stanley Black & Decker reported quarterly earnings of $0.75 per share, exceeding the Zacks Consensus Estimate of $0.68 per share, and up from $0.56 per share a year ago, representing an earnings surprise of 10.29% [1] - The company posted revenues of $3.74 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.37%, although this is a decline from year-ago revenues of $3.87 billion [2] - Over the last four quarters, Stanley Black & Decker has surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Performance - Stanley Black & Decker shares have declined approximately 23.7% since the beginning of the year, compared to a decline of 5.5% for the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $1 on revenues of $4.02 billion, and for the current fiscal year, it is $5.14 on revenues of $15.3 billion [7] Industry Outlook - The Manufacturing - Tools & Related Products industry, to which Stanley Black & Decker belongs, is currently ranked in the bottom 23% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of Stanley Black & Decker's stock may be influenced by the overall outlook for the industry, as research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than a factor of 2 to 1 [8]

Group 1 - The Zacks Premium service offers tools for investors to enhance their stock market strategies, including daily updates on Zacks Rank and Industry Rank, access to the Zacks 1 Rank List, Equity Research reports, and Premium stock screens [1] - The Zacks Style Scores are designed to help investors select stocks with the highest potential to outperform the market within a 30-day timeframe, assigning ratings from A to F based on value, growth, and momentum characteristics [2][9] Group 2 - The Value Score identifies attractive and discounted stocks using various financial ratios such as P/E, PEG, and Price/Sales, appealing to value investors [3] - The Growth Score focuses on a company's financial strength and future outlook, analyzing projected and historical earnings, sales, and cash flow to find stocks with sustainable growth [4] - The Momentum Score helps investors capitalize on price trends by evaluating short-term price changes and earnings estimate revisions [5] Group 3 - The VGM Score combines Value, Growth, and Momentum Scores, providing a comprehensive indicator for investors who utilize multiple investment strategies [6] - The Zacks Rank, a proprietary stock-rating model, simplifies portfolio building by using earnings estimate revisions to assess stock performance [7][10] Group 4 - Stanley Black & Decker (SWK) is currently rated 3 (Hold) on the Zacks Rank, with a VGM Score of A and a Value Style Score of A, indicating attractive valuation metrics such as a forward P/E ratio of 11.49 [11] - Recent upward revisions in earnings estimates for fiscal 2025 have increased the Zacks Consensus Estimate by $0.02 to $5.14 per share, with an average earnings surprise of 16.2%, making SWK a notable consideration for investors [12]

Financial Data and Key Metrics Changes - The company reported a GAAP pretax net income of $8.6 million, or $0.70 per diluted share for Q4 2024 [17] - The net income after tax was $5.9 million, reflecting a $1.1 million increase in Finance Receivables segment revenue and a $1.3 million increase in Pharmaceutical Development segment revenue [18] - The non-GAAP tangible finance book value per share increased by 8.3% year-over-year to $21.15 as of December 31, 2024 [19] - Overall operating expenses decreased to $6.6 million in Q4 2024 from $6.8 million in Q4 2023 [19][20] Business Line Data and Key Metrics Changes - The Finance Receivables segment revenue increased by $1.1 million year-over-year, primarily due to a $2.3 million increase in interest and fees earned on newly funded loans and royalties [18] - The Enteris CDMO division, now rebranded as MOD3 Pharma, reported revenue of $3.6 million, tripling from $1.2 million in 2023 [15] Market Data and Key Metrics Changes - The effective yield of the portfolio for Q4 2024 was 15.5%, indicating a strong performance in financial receivables [13] - The company had $13.8 million of gross finance receivables on non-accrual, with a 15% CECL reserve, resulting in net non-accruals totaling $11.7 million [10] Company Strategy and Development Direction - The company plans to declare a dividend following the closing of the final royalty transaction, with an initial expectation of a one-time special dividend rather than a recurring one [30] - The MOD3 CDMO division is focused on achieving unsubsidized profitability by year-end 2025 [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering 2025 with a healthy loan portfolio and significant cash reserves, anticipating a total of nearly $70 million in gross cash after closing the final royalty transaction [14][24] - The company is actively repurchasing shares, viewing it as an attractive use of capital given the current share price discount [33] Other Important Information - The company announced the signing of a transaction to sell its remaining performing royalty portfolio for $34 million, expected to close in approximately two weeks [11] - The transition of the MOD3 segment to held for sale status was based on GAAP accounting guidance due to an option purchase agreement with a strategic partner [22][23] Q&A Session Summary Question: Regarding the dividend, is it a one-time special dividend or an ongoing dividend? - Management anticipates initially a one-time special dividend, with the possibility of additional special dividends in the future, but does not foresee a recurring dividend at this time [30] Question: What is the status of the current buyback program? - Management confirmed that they are still active in repurchasing shares and expect the Board to consider reauthorizing the buyback program for another year [34]

Financial Data and Key Metrics Changes - The company reported a GAAP pretax net income of $8.6 million, or $0.70 per diluted share for Q4 2024 [17] - The net income after tax was $5.9 million, which included a $1.1 million increase in Finance Receivables segment revenue and a $1.3 million increase in Pharmaceutical Development segment revenue [18] - The non-GAAP tangible finance book value per share increased by 8.3% year-over-year to $21.15 as of December 31, 2024 [19] - Overall operating expenses decreased to $6.6 million in Q4 2024 from $6.8 million in Q4 2023 [19][20] Business Line Data and Key Metrics Changes - The Finance Receivables segment revenue increased by $1.1 million year-over-year, primarily due to a $2.3 million increase in interest and fees earned on newly funded loans and royalties [18] - The Enteris CDMO division, now rebranded as MOD3 Pharma, reported revenue of $3.6 million, tripling from $1.2 million in 2023 [15] Market Data and Key Metrics Changes - The effective yield of the portfolio for Q4 2024 was reported at 15.5% [13] - The company had $13.8 million of gross finance receivables on non-accrual, with a 15% CECL reserve, resulting in a net non-accrual total of $11.7 million [10] Company Strategy and Development Direction - The company plans to declare a dividend following the closing of the final royalty transaction, with an initial expectation of a one-time special dividend rather than a recurring one [30] - The MOD3 CDMO division is focused on achieving unsubsidized profitability by year-end 2025 [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering 2025 on solid footing, with a healthy loan portfolio and significant cash reserves [24] - The company anticipates continued growth in the MOD3 division and is in regular contact with its strategic partner [15] Other Important Information - The company has repurchased approximately 100,000 shares for $1.6 million since September 30, 2024, and continues to view share repurchase as an attractive use of capital [7][33] - The company expects to close a transaction to sell its remaining performing royalty portfolio for $34 million, which is expected to close in approximately two weeks [11] Q&A Session Summary Question: Regarding the dividend, is it a one-time special dividend or an ongoing dividend? - Management anticipates initially a one-time special dividend, with the possibility of additional special dividends in the future, but does not foresee a recurring dividend at this time [30] Question: What is the status of the current buyback program? - Management confirmed that there is room for continued buybacks and expects to reauthorize the program for another year, viewing it as an attractive use of capital [33]

Financial Performance - For Q4 2024, SWK reported total revenue of $12.4 million, a 25.0% increase from $9.9 million in Q4 2023[6] - GAAP net income for Q4 2024 was $5.9 million, up from $2.8 million in Q4 2023, representing a 110.7% increase[8] - SWK's adjusted non-GAAP net income for Q4 2024 was $6.6 million, compared to $2.8 million for Q4 2023, reflecting a significant growth[9] - Total revenues for the year ended December 31, 2024, increased to $44,987,000, up 19% from $37,760,000 in 2023[34] - Net income for the year ended December 31, 2024, was $13,488,000, a decrease of 15% from $15,887,000 in 2023[34] - Net income for 2024 was $13,488,000, a decrease of 15.1% from $15,887,000 in 2023[35] Assets and Liabilities - As of December 31, 2024, net finance receivables were $277.8 million, a 1.2% increase from the previous year[8] - Total investment assets as of December 31, 2024, were $282.7 million, a 2.3% increase from $276.3 million in the previous year[10] - Total current assets increased significantly to $20,254,000 in 2024, compared to $11,869,000 in 2023, representing a growth of 70%[32] - Total liabilities decreased to $43,545,000 as of December 31, 2024, down from $53,939,000 in 2023, a reduction of approximately 19%[32] - The company’s total stockholders' equity increased to $288,690,000 in 2024 from $280,315,000 in 2023, reflecting a growth of 3%[32] Cash Flow and Financing - Net cash provided by operating activities rose to $23,049,000, up 54.5% from $14,888,000 in the previous year[35] - Net cash used in investing activities improved to $(10,134,000) from $(48,948,000), reflecting better investment management[35] - Net cash used in financing activities was $(12,224,000), a significant decrease from $33,140,000 in 2023, indicating reduced financing costs[35] - The company’s cash and cash equivalents increased to $5,927,000 in 2024 from $4,503,000 in 2023, marking a growth of 32%[32] - Cash, cash equivalents, and restricted cash at the end of the period increased to $5,927,000 from $5,236,000[35] Credit and Provisions - The company reported a provision for credit losses of $12,756,000 for the year ended December 31, 2024, compared to $1,912,000 in 2023, indicating a substantial increase in credit loss provisions[34] - Provision for credit losses increased significantly to $12,756,000 from $1,912,000, indicating a rise in expected credit losses[35] Financing Activities - SWK closed a term loan with Triple Ring totaling $8.0 million and expanded its credit facility with Eton to $30.0 million during Q4 2024[12] - The effective yield for Q4 2024 was 15.5%, a 150 basis points increase from 14.0% in Q4 2023[15] - Non-GAAP tangible financing book value per share increased by 8.3% to $21.15 from $19.53 as of December 31, 2023[11] - Interest paid increased to $3,082,000 from $1,351,000, reflecting higher borrowing costs[35] - The amortization of debt issuance costs rose to $1,054,000 from $493,000, indicating increased financing activities[35] Other Notable Events - The company anticipates declaring a dividend following the closing of a larger royalty monetization transaction expected in March 2025[5] - The company experienced a foreign currency transaction gain of $1,414,000, compared to a loss of $1,876,000 in the previous year[35] - The company reported a loss on impairment of intangible assets amounting to $5,771,000, with no such loss reported in 2023[35] - SWK Holdings plans to continue providing non-dilutive financing solutions to healthcare companies, focusing on long-term value creation[28]