SLR Investment (SLRC) - 2025 Q2 - Quarterly Report

PART I Financial Statements Unaudited consolidated financial statements show total assets increased to $2.54 billion, with NAV per share slightly decreasing to $18.19 Consolidated Statements of Assets and Liabilities Total assets increased to $2.54 billion, liabilities to $1.54 billion, leading to a slight NAV per share decrease to $18.19 Key Financial Metrics | Metric | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $2,537,272 thousand | $2,449,417 thousand | | Total Liabilities | $1,544,923 thousand | $1,456,491 thousand | | Total Net Assets | $992,349 thousand | $992,926 thousand | | Net Asset Value Per Share | $18.19 | $18.20 | Consolidated Statements of Operations Total investment income decreased for the three and six months ended June 30, 2025, while net increase in net assets rose to $24.2 million for the quarter, resulting in an EPS of $0.44 Operating Performance Summary | Financial Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Investment Income | $53,913 | $58,978 | $107,091 | $117,077 | | Net Investment Income | $21,609 | $24,318 | $43,714 | $48,170 | | Net Increase in Net Assets | $24,232 | $23,228 | $44,158 | $51,099 | | Earnings Per Share | $0.44 | $0.43 | $0.81 | $0.94 | Consolidated Statements of Changes in Net Assets Net assets decreased by $0.58 million for the six months ended June 30, 2025, as the net increase from operations was offset by distributions to stockholders Changes in Net Assets | Description (in thousands) | Six Months Ended June 30, 2025 | | :--- | :--- | | Net Assets at Beginning of Period | $992,926 | | Net Increase from Operations | $44,158 | | Net Distributions to Stockholders | ($44,735) | | Net Assets at End of Period | $992,349 | Consolidated Statements of Cash Flows Net cash outflow from operating activities was $136.7 million for the six months ended June 30, 2025, funded by $95.2 million from financing, resulting in a $41.5 million decrease in cash Cash Flow Summary | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($136,715) | $10,266 | | Net Cash Provided by (Used in) Financing Activities | $95,225 | ($69,263) | | Net Decrease in Cash and Cash Equivalents | ($41,490) | ($58,997) | Consolidated Schedule of Investments The investment portfolio had a fair value of $2.13 billion as of June 30, 2025, diversified across asset classes, with Financial Services (28.3%) as the largest industry concentration Investment Portfolio by Asset Class | Asset Class | Fair Value (in thousands) | % of Total Investments | | :--- | :--- | :--- | | Senior Secured Loans | $1,268,904 | 59.4% | | Common Equity/Equity Interests/Warrants | $694,536 | 32.5% | | Equipment Financing | $138,988 | 6.5% | | Preferred Equity | $32,510 | 1.5% | | Total Investments | $2,134,938 | 100.0% | - The top three industry concentrations by fair value as of June 30, 2025 were Financial Services (28.3%), Multi-Sector Holdings (17.7%), and Health Care Providers & Services (12.0%)[44] Notes to Consolidated Financial Statements The notes detail accounting policies, a $1.18 billion debt structure, and $396.9 million in unfunded commitments, alongside operational summaries for key portfolio companies - The company has an advisory agreement with SLR Capital Partners, LLC, with a base management fee calculated at an annual rate of 1.50% on gross assets up to 200% of net assets and 1.00% on gross assets exceeding that threshold[93] Debt Obligations | Debt Instrument | Face Amount (June 30, 2025) | | :--- | :--- | | Credit Facility | $657,210 thousand | | SPV Credit Facility | $165,050 thousand | | Unsecured Notes (various series) | $359,000 thousand | | Total Debt | $1,181,260 thousand | - As of June 30, 2025, the company had total unfunded commitments of $396.9 million to various portfolio companies[136] Management's Discussion and Analysis of Financial Condition and Results of Operations Investment activity significantly increased to $333.3 million in Q2 2025, though gross investment income decreased, while the company maintains strong liquidity with $287.7 million in unused borrowing capacity - Investment activity for the three months ended June 30, 2025, totaled approximately $333.3 million, a significant increase from $92.1 million in the same period of 2024[198] - The decrease in gross investment income for the three and six-month periods ended June 30, 2025, was primarily due to a decrease in the average size of the income-producing investment portfolio and a decrease in index rates[240] - As of June 30, 2025, the company had $287.7 million of unused borrowing capacity under its credit facilities, providing significant liquidity[247] Quantitative and Qualitative Disclosures About Market Risk This section outlines the company's exposure to interest rate risk, where a 1% change in SOFR would impact annual net investment income by approximately five cents per share SOFR Sensitivity Analysis | Change in SOFR | Impact on Net Investment Income Per Share (Annualized) | | :--- | :--- | | +1.00% | +$0.05 | | -1.00% | -$0.05 | Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The company's management concluded that disclosure controls and procedures were effective as of the end of the period covered by the report[285] - No changes in internal control over financial reporting occurred during the second quarter of 2025 that materially affected, or are reasonably likely to materially affect, the company's internal controls[286] PART II Legal Proceedings The company is not currently subject to any material legal proceedings nor aware of any material threatened litigation - As of the reporting date, SLR Investment Corp. and its subsidiaries are not subject to any material legal proceedings[288] Risk Factors There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes to the risk factors discussed in the company's Annual Report on Form 10-K filed on February 25, 2025[289] Other Information No directors or officers adopted or terminated Rule 10b5-1 trading plans, and a $50 million private offering of unsecured notes closed on July 30, 2025 - On July 30, 2025, subsequent to the quarter's end, the company closed a private offering of $50 million of 5.96% unsecured notes due 2028 (Series I)[294] - During the quarter ended June 30, 2025, no directors or officers adopted, modified, or terminated any Rule 10b5-1 trading plans[293]