SLR Investment (SLRC) - 2025 Q2 - Quarterly Results

Q2 2025 Financial Results Overview SLR Investment Corp. reported Q2 2025 NII of $0.40 per share, net assets up $0.44 per share, NAV at $18.19, and a $0.41 quarterly distribution Financial Highlights & Key Announcements SLR Investment Corp. reported Q2 2025 NII of $0.40 per share, a net increase in net assets of $0.44 per share, and a quarterly distribution of $0.41 per share Financial Metrics | Metric | Value | | :--- | :--- | | Net Investment Income (NII) | $21.6 million | | NII per Share | $0.40 | | Net Asset Value (NAV) per Share | $18.19 | | Quarterly Distribution per Share | $0.41 | | Net Increase in Net Assets from Operations | $24.2 million | | Net Increase in Net Assets per Share | $0.44 | Portfolio and Leverage Metrics (as of June 30, 2025) | Metric (as of June 30, 2025) | Value | | :--- | :--- | | Investment Portfolio Fair Value | $2.1 billion | | Comprehensive Investment Portfolio Fair Value | $3.2 billion | | Non-accruals (at fair value) | 0.3% | | Net Debt-to-Equity | 1.17x | Management Commentary Management highlighted a successful strategic shift to specialty finance, comprising over 80% of the portfolio, with solid credit quality and low non-accruals - The company is strategically shifting its portfolio mix to predominantly specialty finance investments, which now account for over 80% of the portfolio's fair value[4] - Credit quality is reported as solid, attributed to a focus on first lien senior secured specialty finance and non-cyclical sponsor finance, with low non-accrual rates[4] Investment Portfolio Analysis The $3.2 billion Comprehensive Investment Portfolio is diversified across 940 issuers, 98.3% senior secured, with Asset-Based Loans as the largest segment Comprehensive Investment Portfolio Activity Q2 2025 originations of $567.1 million and repayments of $387.0 million led to $180.1 million net portfolio growth, driven by ABL Q2 2025 Investment Activity | Asset Class | Originations ($mm) | Repayments ($mm) | Net Activity ($mm) | | :--- | :--- | :--- | :--- | | Sponsor Finance | $23.9 | $68.6 | ($44.7) | | Asset-based Lending | $373.3 | $147.7 | $225.6 | | Equipment Finance | $141.2 | $169.8 | ($28.6) | | Life Science Finance | $28.7 | $0.9 | $27.8 | | Total | $567.1 | $387.0 | $180.1 | Comprehensive Investment Portfolio Composition As of June 30, 2025, the $3.2 billion Comprehensive Investment Portfolio was diversified across 940 issuers, 98.3% senior secured, and 41.6% Asset-Based Loans - The portfolio is diversified across approximately 940 unique issuers in over 110 industries, with an average exposure of $3.5 million (0.1%) per issuer[9] Portfolio Composition (at fair value) | Composition (at fair value) | Amount ($mm) | % of Portfolio | Weighted Avg. Asset Yield | | :--- | :--- | :--- | :--- | | Cash Flow Loans (Sponsor Finance) | $546.6 | 16.9% | 10.3% | | Asset-Based Loans | $1,349.0 | 41.6% | 13.4% | | Equipment Financings | $1,074.1 | 33.2% | 11.6% | | Life Science Loans | $214.9 | 6.6% | 13.1% | | Total Senior Secured Investments | $3,184.6 | 98.3% | 12.2% | | Equity and Equity-like Securities | $54.8 | 1.7% | N/A | | Total Comprehensive Portfolio | $3,239.4 | 100.0% | N/A | - The portfolio is heavily weighted towards senior secured debt, with 95.9% in first lien loans and 2.4% in second lien loans (2.2% ABL, 0.2% Cash Flow)[9][10] SLR Investment Corp. Portfolio Asset Quality SLRC's on-balance sheet portfolio maintains high asset quality, with 99.7% performing at fair value and 97.8% rated in the top two risk categories - As of June 30, 2025, 99.7% of the portfolio was performing on a fair value basis, with only one investment on non-accrual[14] Internal Investment Risk Ratings | Internal Investment Rating | Investments at Fair Value ($mm) | % of Total Portfolio | | :--- | :--- | :--- | | 1 (Least Risk) | $680.7 | 31.9% | | 2 | $1,407.3 | 65.9% | | 3 | $41.1 | 1.9% | | 4 (Most Risk) | $5.8 | 0.3% | Investment Income Contribution by Asset Class For Q2 2025, Asset-based Lending was the largest contributor to total investment income, generating $23.1 million (42.9%), followed by Sponsor Finance Q2 2025 Investment Income by Asset Class | For the Quarter Ended 6/30/2025 | Sponsor Finance | Asset-based Lending | Equipment Finance | Life Science Finance | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Investment Income ($mm) | $14.7 | $23.1 | $9.6 | $6.5 | $53.9 | | % Contribution | 27.3% | 42.9% | 17.8% | 12.0% | 100.0% | SLR Senior Lending Program LLC (SSLP) The SSLP joint venture had a $184.1 million funded portfolio across 29 borrowers, with $32.3 million in investments and $13.9 million in repayments - The SSLP's portfolio consisted of $184.1 million in floating rate senior secured loans to 29 borrowers, with an average investment size of $6.3 million[17] Financial Performance (Results of Operations) Q2 2025 saw decreased gross and net investment income compared to Q2 2024, but a net unrealized gain resulted in a higher net increase in net assets Year-over-Year Comparison Q2 2025 gross investment income decreased to $53.9 million and net investment income to $21.6 million compared to Q2 2024, with net assets increasing to $24.2 million Q2 Financial Performance Comparison | Metric ($ in millions) | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Gross Investment Income | $53.9 | $59.0 | ($5.1) | | Net Expenses | $32.3 | $34.7 | ($2.4) | | Net Investment Income | $21.6 | $24.3 | ($2.7) | | Net Realized/Unrealized Gain (Loss) | $2.6 | ($1.1) | $3.7 | | Net Increase in Net Assets | $24.2 | $23.2 | $1.0 | Q2 Per Share Data Comparison | Per Share Data | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Investment Income per Share | $0.40 | $0.45 | | Earnings per Share | $0.44 | $0.43 | Capital Structure and Liquidity As of June 30, 2025, SLRC's net debt-to-equity ratio was 1.17x, within target, with $359 million in unsecured notes and no near-term refinancing obligations Debt and Leverage SLRC's net debt-to-equity ratio was 1.17x as of June 30, 2025, within target, with $359 million in unsecured notes and no near-term refinancing needs - The company's net debt-to-equity ratio was 1.17x as of June 30, 2025, up from 1.04x at March 31, 2025, but within the target range of 0.9x to 1.25x[28] - At quarter-end, the company had drawn $682.3 million on its $970 million revolving credit facilities and had $359 million of unsecured notes outstanding[25][26] - The company has no near-term refinancing needs, with the next unsecured notes maturity scheduled for December 2026[27] Available Capital and Commitments As of June 30, 2025, SLRC and its specialty finance portfolio companies had over $650 million in available capital and $332.6 million in non-discretionary unfunded commitments - Total available capital, including borrowing capacity at SSLP and specialty finance portfolio companies, was over $650 million[29] - The company had unfunded commitments of approximately $332.6 million, excluding discretionary commitments to its portfolio companies[30] Subsequent Events and Shareholder Information Following quarter-end, SLRC closed a $50.0 million private offering of unsecured notes due 2028 and declared a quarterly distribution of $0.41 per share Subsequent Events After quarter-end, SLRC issued $50.0 million in unsecured notes due 2028 at 5.96% and declared a quarterly distribution of $0.41 per share - On July 30, 2025, the company issued $50.0 million of unsecured notes due 2028 with a fixed interest rate of 5.96%[31] - On August 5, 2025, the Board declared a quarterly distribution of $0.41 per share, payable on September 26, 2025[32] Conference Call Information SLR Investment Corp. will host an earnings conference call and webcast on Wednesday, August 6, 2025, at 10:00 a.m. ET to discuss Q2 2025 financial results - An earnings conference call is scheduled for 10:00 a.m. ET on Wednesday, August 6, 2025[33] - The call will be accessible via telephone and a live webcast on the company's investor relations website[33][34] Consolidated Financial Statements SLR Investment Corp.'s consolidated financial statements provide a detailed overview of its assets, liabilities, and operational performance for Q2 2025 Consolidated Statements of Assets and Liabilities As of June 30, 2025, SLR Investment Corp. reported total assets of $2.54 billion, liabilities of $1.54 billion, net assets of $992.3 million, and NAV of $18.19 per share Balance Sheet Summary | Balance Sheet ($ in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Investments at Fair Value | $2,134,938 | $2,005,634 | | Total Assets | $2,537,272 | $2,449,417 | | Total Liabilities | $1,544,923 | $1,456,491 | | Total Net Assets | $992,349 | $992,926 | | Net Asset Value Per Share | $18.19 | $18.20 | Consolidated Statements of Operations For Q2 2025, the company generated $53.9 million in total investment income, resulting in $21.6 million net investment income and a $24.2 million net increase in net assets Income Statement Summary (Three months ended June 30, 2025) | Income Statement (Three months ended June 30, 2025) | Amount ($ in thousands) | | :--- | :--- | | Total investment income | $53,913 | | Net expenses | $32,304 | | Net investment income | $21,609 | | Net realized and unrealized gain | $2,623 | | Net increase in net assets from operations | $24,232 | | Earnings per share | $0.44 |