Financial Data and Key Metrics Changes - SLRC reported net investment income (NII) of $0.40 per share and net income of $0.46 per share for Q4 2025, with NII remaining flat quarter-over-quarter [7] - Net assets value per share increased to $18.26 as of December 31, 2025, up from $18.21 at the end of Q3 2025 and $18.20 at the end of Q4 2024 [16] - For the full year 2025, SLRC generated net income of $1.70 per share, representing a 9.3% return on average equity [7] Business Line Data and Key Metrics Changes - In Q4 2025, SLRC originated $462 million in new investments, with repayments of $445 million, resulting in net fundings of $70 million and a year-end comprehensive portfolio of $3.3 billion, reflecting a 7.2% annual growth [8] - Asset-based lending (ABL) originations for Q4 were $247 million, nearly double the prior year period, with full-year ABL originations totaling $1.1 billion [11] - The portfolio consisted of approximately 98% senior secured loans, with 95% in first lien loans, and the weighted average yield on the portfolio was 11.6%, down from 12.2% in Q3 2025 [21][22] Market Data and Key Metrics Changes - SLRC's exposure to the software industry was approximately 2% as of December 31, 2025, one of the lowest among publicly traded BDCs, providing a safe haven from technology obsolescence risks [9] - The company reported a weighted average investment risk rating of under two, with 100% of the portfolio performing and no investments on non-accrual [23][14] Company Strategy and Development Direction - The company is shifting its portfolio towards specialty finance strategies due to their more attractive risk-adjusted returns and is focused on downside protection [20] - SLRC's multi-strategy approach to private credit investing allows for diversification and disciplined investment, enabling the company to pass on opportunities that do not meet conservative lending standards [6][10] - The company aims to maintain a strong liquidity profile to capitalize on market dislocations while adhering to its conservative investment philosophy [15][42] Management's Comments on Operating Environment and Future Outlook - Management noted a surprisingly resilient U.S. economy in 2025, despite various uncertainties, and expressed confidence in SLRC's insulation from risks faced by peers due to strict underwriting standards [5][4] - The company anticipates continued opportunities in the ABL market and is prepared to be opportunistic in cash flow lending as market conditions evolve [56][58] - Management emphasized the importance of protecting capital and avoiding losses while maintaining dividend coverage [41][42] Other Important Information - SLRC's investment portfolio had a fair value of approximately $2.1 billion across 100 portfolio companies, funded by a mix of revolving credit facilities and term debt [16][17] - The company has over $850 million of available capital to deploy, enhancing its ability to take advantage of market opportunities [14] Q&A Session Summary Question: Update on pipeline within ABL and equipment finance - Management is actively engaged in potential acquisitions and has a number of opportunities in the pipeline, though nothing imminent [46][47] Question: Impact of tight spreads in public debt markets on ABL and equipment finance - While overall returns have slightly decreased, the company maintains competitive spreads due to structural protections and disciplined peer behavior [48] Question: Signs of concern in credit metrics - Management reported no significant themes of concern, with a watch list of roughly 2% and ongoing monitoring of borrower performance [49][50] Question: Expectations for leverage and opportunistic investments - Management indicated a desire to increase leverage in response to attractive opportunities while remaining focused on repayments [55][56] Question: Sentiment on M&A opportunities in ABL - Management believes dislocation in the market may lead to more opportunities at better pricing [62]

SLR Investment (NasdaqGS:SLRC) Q4 2025 Earnings call February 25, 2026 10:00 AM ET Speaker4Please note this call is being recorded. It is now my pleasure to turn the meeting over to Mr. Michael Gross, Chairman and Co-CEO. Please go ahead, sir.Speaker3Thank you very much, and good morning. Welcome to SLR Investment Corp.'s earnings call for the quarter and year-ended December 31st, 2025. I'm joined today by my long-term partner, Bruce Spohler, our Co-Chief Executive Officer, as well as our Chief Financial Of ...

Group 1 - Prospect Capital Management's President and COO, Grier Eliasek, was featured in a Q&A discussing the firm's approach to private credit investing and market conditions [1][2] - The firm focuses on opportunities within the lower middle market, indicating a strategic interest in this segment [2] - Prospect Capital Management has 38 years of experience in managing high-yielding debt and equity investments, employing a team of 150 professionals [3] Group 2 - As of September 30, 2025, Prospect Capital Management has $7.3 billion in regulatory assets under management [3]

Core Insights - SLR Investment Corp reported stable third-quarter results, with net investment income of $0.40 per share and net income of $0.43 per share, reflecting a 9.4% annualized return on equity [1][17] - The company's net asset value per share increased slightly to $18.21 as of September 30, 2025, remaining approximately flat year over year [1][14] - SLR's multi-strategy approach to private credit investing has allowed it to maintain stability in its portfolio amid rising credit risks and competitive market conditions [5][38] Financial Performance - The company originated $447 million in new investments during the third quarter, a 12.7% increase year over year, while repayments totaled $419 million [4][5] - Gross investment income for the quarter was $57 million, up from $53.9 million in the previous quarter, with net expenses rising to $35.4 million [16][17] - The net increase in net assets resulting from operations was $23.3 million for the quarter, compared to $24.2 million in the prior quarter [17] Portfolio Composition - Approximately 93% of third-quarter originations were in specialty finance, reflecting a shift towards strategies that offer better risk-adjusted returns [10][19] - As of September 30, 2025, 83% of the loan portfolio consisted of specialty finance investments, with cash flow loans representing only 15.3% [11][12] - The comprehensive portfolio totaled approximately $3.3 billion, with 98.2% consisting of senior secured loans [22] Market Conditions and Strategy - The company is focusing on asset-based lending (ABL) due to strong demand from borrowers seeking liquidity solutions amid uncertain economic conditions [8][24] - SLR's ABL portfolio totaled over $1.4 billion, representing 44% of the total portfolio, with a weighted average yield of 13.4% [25][26] - The company has made significant investments in personnel and infrastructure to enhance its ABL capabilities, hiring over 100 new employees in the past two years [9][46] Risk Management - SLR has adopted a more discerning approach to cash flow lending to safeguard performance in a high-interest rate environment [6][39] - The weighted average investment risk rating of the portfolio was under two, indicating a low-risk profile, with 99.5% of the portfolio performing on a cost basis [23] - The company emphasizes rigorous underwriting and active monitoring to mitigate risks associated with asset-backed lending [20][21]

Financial Data and Key Metrics Changes - SLR Investment Corp reported net investment income of $0.40 per share and net income of $0.43 per share for Q3 2025, with net asset value per share increasing slightly to $18.21 [4][14] - The company's net income for the quarter equates to a 9.4% annualized return on equity, with net investment per share being a penny below the base dividend of $0.41 [4][16] - Gross investment income totaled $57 million, up from $53.9 million in the previous quarter, while net expenses increased to $35.4 million from $32.3 million [16] Business Line Data and Key Metrics Changes - During Q3, SLR originated $447 million in new investments, a 12.7% increase year-over-year, and received repayments of $419 million [5][10] - Approximately 93% of Q3 originations were in specialty finance, reflecting a strategic shift towards this area due to more attractive risk-adjusted returns [10][11] - The asset-based lending (ABL) portfolio totaled over $1.4 billion, representing 44% of the total portfolio, with a weighted average asset-level yield of 13.4% [24] Market Data and Key Metrics Changes - The company noted strong demand for corporate asset-based lending solutions as companies seek liquidity amid uncertain economic conditions [9] - The weighted average yield on the comprehensive portfolio was 12.2%, consistent with the prior quarter, indicating stability in the portfolio's performance [21] - The portfolio's risk profile remains strong, with 99.5% of investments performing and only one investment on non-accrual [22] Company Strategy and Development Direction - SLR continues to focus on specialty finance strategies due to their higher pricing and greater downside protection [18] - The company is strategically hiring to expand its asset-based lending capabilities, with over 100 new hires in the past two years [9][40] - SLR's multi-strategy approach to private credit investing is designed to preserve capital and provide a diversified investment portfolio [34] Management's Comments on Operating Environment and Future Outlook - Management expressed awareness of elevated concerns regarding credit quality in the private credit industry but emphasized SLR's conservative approach to cash flow lending [6][7] - The company believes that ABL remains the most compelling risk-adjusted opportunity in private credit heading into 2026 [20] - Management highlighted the importance of rigorous underwriting practices in light of recent market scrutiny and failures in the asset-backed finance market [19] Other Important Information - SLR's investment portfolio had a fair market value of approximately $2.1 billion, with 109 portfolio companies across 31 industries [14] - The company has over $850 million of available capital to deploy, positioning it well for both stable and softening economic conditions [12] Q&A Session Summary Question: Did you mention that you had hired 100 new people over the past two years? - Yes, primarily in our asset-based and special lending strategies [39] Question: Is there something specific that you do to ensure 100% of your assets are qualified? - 100% are qualified assets, and we have not been limited in growing our special finance and asset-based lending strategies [41] Question: Can you dig into the asset-based lending churn? - The churn is often due to companies in transition, with asset-based structures typically having a two to three-year duration [42] Question: How do you adjust underwriting for depreciating equipment in equipment finance? - Extensions of existing leases are effectively profit to the bottom line for us, as we have already amortized out the equipment [43] Question: What do you think about the attractiveness of ABL going into 2026? - ABL is viewed as a manufacturing business requiring significant infrastructure, making it difficult for new entrants [45] Question: Is the dividend sustainable given the forward curve? - The last several quarters have seen fluctuations around the dividend, and adjustments will be made based on portfolio performance [47]

Financial Data and Key Metrics Changes - SLR Investment Corp reported net investment income of $0.41 per share for Q1 2025, consistent with the base dividend of $0.41 per share, reflecting a return on equity of approximately 9% [6][17] - The company's net asset value at the end of the quarter was $18.16 per share, a slight decrease of $0.04 from $18.20 per share at the end of Q4 2024 [14] - Gross investment income for the three months ended March 31 totaled $53.2 million, down from $55.6 million in the previous quarter [16] Business Line Data and Key Metrics Changes - The comprehensive portfolio totaled $3.1 billion at quarter end, with $361 million in new investments and $391 million in repayments during Q1 [7][14] - Approximately 80% of the portfolio was derived from specialty finance investments, with cash flow loans now representing less than 20%, the lowest level in three years [7][8] - The yield on the comprehensive portfolio increased to 12.2%, up from 12.1% in the previous quarter and 11.8% in Q1 2024 [8] Market Data and Key Metrics Changes - The current environment is marked by policy volatility and economic uncertainty, with expectations for elevated inflation and slower global growth [9][10] - The company has over $800 million of available capital to deploy, positioning it to take advantage of both durable economic conditions and potential economic softening [12] Company Strategy and Development Direction - The company has shifted its portfolio mix towards asset-based specialty finance strategies, providing greater downside protection from underlying collateral [7] - SLR's multi-strategy investment approach aims to deliver consistent returns and protect capital across market cycles, with a focus on high-quality collateral [19] - The company is actively monitoring portfolio companies for impacts from tariffs and is focused on domestic service-oriented businesses [10][52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating economic uncertainties and capitalizing on volatility from widening credit spreads [5] - The company believes its disciplined approach and strong credit profile will allow it to withstand persistent inflationary pressures and high interest rates [11] - Management highlighted the importance of monitoring trends in receivables and inventory to manage risks effectively [53] Other Important Information - The company declared a Q2 2025 quarterly distribution of $0.41 per share, payable on June 27, 2025 [18] - SLR Investment Corp is rated investment grade by Fitch, Moody's, and DBRS, with no near-term refinancing obligations [15] Q&A Session Summary Question: Follow-up on pipeline weighting towards ABL and equipment finance opportunities - Management indicated that the pipeline is approximately 75-80% weighted towards ABL, covering various industries [40][41] Question: Description of recent attractive cash flow lending opportunities - Management noted that attractive opportunities involve financing tuck-in acquisitions of seasoned platforms, allowing for short duration and potential re-underwriting [44][46] Question: Contribution from Kingsbridge in the quarter - Management confirmed that Kingsbridge's performance included some one-time gains but is expected to continue performing well [48] Question: Estimate of tariff exposure in the portfolio - Management stated that less than 1% of the portfolio has direct exposure to tariffs, primarily due to the focus on domestic service-based businesses [51][52] Question: Yield increase in the equipment finance business - Management explained that the yield increase is due to borrowers extending leases and some one-time gains from asset sales [56][57]

Financial Data and Key Metrics Changes - For Q4 2024, the company generated net investment income of $0.44 per share, flat year-over-year but down from $0.45 in Q3 2024 [13][25] - Full-year net investment income per share increased by 5% to $1.77 compared to 2023 [14] - The net asset value at year-end rose to $18.20 from $18.09 a year ago, indicating strong credit quality [14][22] Business Line Data and Key Metrics Changes - The portfolio consisted of $3.1 billion at year-end, with a yield of 12.1%, up from 11.8% in the prior quarter [16][30] - 94% of Q4 originations were in specialty finance, with a focus on asset-based lending [17][29] - The cash flow loan portfolio was $634 million, with a weighted average yield of 10.6%, down from 11.1% in the prior quarter [38] Market Data and Key Metrics Changes - The company reported a significant increase in its asset-based lending (ABL) pipeline, with $128 million of new ABL investments and repayments of $205 million in Q4 [41][43] - The weighted average asset level yield for ABL was 14.6%, compared to 14.4% in the prior quarter [43] Company Strategy and Development Direction - The company is focusing on a multi-strategy approach to private credit investing, emphasizing specialty finance to capture attractive risk-reward opportunities [12][54] - The company aims to maintain a conservative underwriting approach while expanding its ABL and specialty finance segments [15][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate current economic uncertainties, citing a strong investment track record and diversified portfolio [12][54] - The company anticipates improved conditions in sponsor finance as CEO confidence increases and M&A activity picks up [39] Other Important Information - The company had only one investment on non-accrual, representing 0.6% of the investment portfolio, which is below the peer average [20][32] - The company declared a Q1 2025 quarterly distribution of $0.41 per share, payable on March 28, 2025 [26] Q&A Session Summary Question: Opportunities in specialty finance verticals and potential acquisitions - Management noted that they passed on some acquisition opportunities last year due to better organic growth potential [60][61] Question: Sponsor finance structure and spread pressure - Management indicated that both spread compression and loosening of terms have stabilized but remain unattractive compared to specialty finance [65][66] Question: Equipment finance sector and yield volatility - Management stated that the equipment finance sector is reasonably well matched and benefits from the current inflationary environment [72][77] Question: ABL pipeline and transition from cash flow opportunities - Management confirmed that the increase in the ABL pipeline is primarily from individual loans rather than acquiring new specialty finance companies [78][80] Question: Higher dividend income and its sustainability - Management indicated that the elevated dividend income is expected to be sustainable, driven by the acquisition of the Webster portfolio [106][108]