PART I. FINANCIAL INFORMATION Financial Statements The company's unaudited financials show decreased assets due to a portfolio sale but a significant increase in net income Unaudited Condensed Consolidated Balance Sheets The balance sheet reflects reduced assets and equity, driven by a finance receivable sale and a special dividend Condensed Consolidated Balance Sheet Data (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $285,697 | $332,235 | | Cash and cash equivalents | $8,006 | $5,927 | | Finance receivables, net | $237,604 | $277,760 | | Assets held for sale, net | $6,488 | $6,398 | | Total Liabilities | $39,228 | $43,545 | | Revolving credit facility | $294 | $6,233 | | Unsecured senior notes, net | $31,736 | $31,412 | | Total Stockholders' Equity | $246,469 | $288,690 | Unaudited Condensed Consolidated Statements of Income Six-month net income nearly doubled year-over-year, primarily due to a benefit from credit losses Condensed Consolidated Statements of Income (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $10,052 | $10,847 | $21,884 | $22,207 | | Provision (benefit) for credit losses | $761 | $4,095 | $(704) | $9,392 | | Income from operations | $4,629 | $901 | $12,742 | $1,980 | | Net income | $3,536 | $3,680 | $8,075 | $4,148 | | Diluted EPS | $0.29 | $0.30 | $0.66 | $0.33 | Unaudited Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity declined significantly due to a $49.1 million special cash dividend and share repurchases - A special cash dividend of $4.00 per share, totaling $49.1 million, was paid during the second quarter of 202513 - The company repurchased 58,954 shares of common stock in the open market during the second quarter of 202513 Unaudited Condensed Consolidated Statements of Cash Flows Cash increased by $2.1 million, with strong operating and investing inflows offsetting a large dividend payment Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $16,081 | $9,843 | | Net cash provided by investing activities | $42,841 | $4,813 | | Net cash used in financing activities | $(56,843) | $(14,343) | | Net increase in cash | $2,079 | $313 | Notes to the Unaudited Condensed Consolidated Financial Statements Notes detail the two operating segments, a major royalty portfolio sale, and the classification of MOD3 assets as held for sale - The company operates through two reportable segments: 'Finance Receivables' and 'Pharmaceutical Development' (MOD3 Pharma)1821 - On April 10, 2025, the company sold the majority of its finance receivables royalty portfolio to Soleus Capital for approximately $34.0 million in cash, recognizing a loss of $3.7 million on the transaction50 - The company entered into an agreement with Aptar, granting an exclusive option to acquire assets of its MOD3 (Pharmaceutical Development) business; these assets were classified as held for sale575961 - As of June 30, 2025, the company had $0.3 million outstanding on its $60.0 million revolving credit facility and $33.0 million in 9.00% Senior Notes due 2027687071 Management's Discussion and Analysis of Financial Condition and Results of Operations Management highlights a positive swing in credit loss provisions as the key driver for improved six-month net income Results of Operations A $10.1 million favorable change in credit loss provisions drove the six-month net income increase to $8.1 million Comparison of Six Months Ended June 30 (in millions) | Line Item | 2025 | 2024 | Change $ | | :--- | :--- | :--- | :--- | | Revenues | $21.9 | $22.2 | $(0.3) | | Provision (benefit) for credit losses | $(0.7) | $9.4 | $(10.1) | | Other income (expense), net | $(2.4) | $3.4 | $(5.8) | | Net income | $8.1 | $4.1 | $4.0 | - The decrease in the provision for credit losses for the six-month period was the primary driver of increased net income, mainly due to impairments recognized in the prior year period129 - The decrease in 'Other income (expense), net' for the six-month period was primarily due to net losses on finance receivables in the current period compared to net gains in the prior year134 Liquidity and Capital Resources Liquidity improved with an increase in cash to $8.0 million and significant availability on the revolving credit facility - Cash and cash equivalents increased to $8.0 million as of June 30, 2025, from $5.9 million as of December 31, 2024136 - The company has a $60.0 million revolving credit facility with $0.3 million outstanding as of June 30, 2025, and total availability of $54.7 million after considering a liquidity covenant137 - As of June 30, 2025, the company had $7.5 million in unfunded commitments to its portfolio companies142 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate changes, partially mitigated by its floating-rate receivables portfolio - The company's primary market risk is interest rate risk, as its net investment income depends on the spread between lending and borrowing rates145 - The majority of the finance receivables portfolio pays interest based on floating rates, which helps mitigate the risk of rising interest rates on the company's cost of funds146147 Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period150 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls151 PART II. OTHER INFORMATION Legal Proceedings The company is not involved in any legal proceedings expected to have a material impact on the business - As of the reporting date, the company is not involved in any arbitration or other legal proceeding that it expects to have a material effect on its business153 Risk Factors No material changes have been identified from the risk factors disclosed in the 2024 Annual Report on Form 10-K - No material changes from the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024154 Unregistered Sales of Equity Securities and Use of Proceeds A new $10.0 million share repurchase program was authorized, with $0.9 million executed in the second quarter - On May 19, 2025, the Board authorized a new share repurchase program to buy back up to $10.0 million of common stock through May 19, 2026156 Share Repurchases for Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 10,026 | $16.78 | | May 2025 | 23,125 | $14.13 | | June 2025 | 25,803 | $14.52 | | Total Q2 | 58,954 | $14.75 | - As of June 30, 2025, approximately $9.3 million remained available for purchase under the current repurchase program157 Defaults Upon Senior Securities None Mine Safety Disclosures Not Applicable Other Information None Exhibits The report includes required CEO/CFO certifications and XBRL data files as filed exhibits
SWK Holdings(SWKH) - 2025 Q2 - Quarterly Report