10-Q

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

10-Q 1 d215818d10q.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarter Ended March 31, 2022

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 814-00754

SLR INVESTMENT CORP.

(Exact name of registrant as specified in its charter)


Maryland		26-1381340
(State of Incorporation)		(I.R.S. Employer Identification No.)
500 Park Avenue New York, N.Y.		10022
(Address of principal executive offices)		(Zip Code)

(212) 993-1670

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading

Symbol(s)

Name of Each Exchange
on Which Registered

Common Stock, par value $0.01 per share

SLRC

The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s Common Stock, $.01 par value, outstanding as of April 29, 2022 was 54,772,651.

SLR INVESTMENT CORP.

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2022

TABLE OF CONTENTS


		PAGE
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Statements of Assets and Liabilities as of March 31, 2022 (unaudited) and December 31, 2021		3

	Consolidated Statements of Operations for the three months ended March 31, 2022 (unaudited) and the three months ended March 31, 2021 (unaudited)		4

	Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2022 (unaudited) and the three months ended March 31, 2021 (unaudited)		5

	Consolidated Statements of Cash Flows for the three months ended March 31, 2022 (unaudited) and the three months ended March 31, 2021 (unaudited)		6

	Consolidated Schedule of Investments as of March 31, 2022 (unaudited)		7

	Consolidated Schedule of Investments as of December 31, 2021		12

	Notes to Consolidated Financial Statements (unaudited)		17

	Report of Independent Registered Public Accounting Firm		35

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		36

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		51

Item 4.	Controls and Procedures		52

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings		52

Item 1A.	Risk Factors		53

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		54

Item 3.	Defaults Upon Senior Securities		54

Item 4.	Mine Safety Disclosures		54

Item 5.	Other Information		54

Item 6.	Exhibits		54

	Signatures		56

PART I. FINANCIAL INFORMATION

In this Quarterly Report, “Company”, “we”, “us”, and “our” refer to SLR Investment Corp. unless the context states otherwise.

Item 1.

Financial Statements

SLR INVESTMENT CORP.

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(in thousands, except share amounts)


	March 31, 2022 (unaudited)			December 31, 2021
Assets
Investments at fair value:
Companies less than 5% owned (cost: $956,039 and $985,088, respectively)	$	921,831		$	964,379
Companies more than 25% owned (cost: $708,850 and $711,865, respectively)		704,642			706,203
Cash		9,075			2,935
Cash equivalents (cost: $579,829 and $320,000, respectively)		579,829			320,000
Dividends receivable		9,001			9,028
Interest receivable		7,244			6,521
Receivable for investments sold		735			1,378
Prepaid expenses and other assets		927			567

Total assets	$	2,233,284		$	2,011,011

Liabilities
Debt ($815,000 and $818,500 face amounts, respectively, reported net of unamortized debt issuance costs of $6,142 and $6,462, respectively. See notes 6 and 7)	$	808,858		$	812,038
Payable for investments and cash equivalents purchased		579,870			320,041
Distributions payable		—			17,327
Management fee payable (see note 3)		7,216			7,435
Performance-based incentive fee payable (see note 3)		—			1,864
Interest payable (see note 7)		8,062			4,492
Administrative services payable (see note 3)		520			2,689
Other liabilities and accrued expenses		2,341			2,844

Total liabilities	$	1,406,867		$	1,168,730

Commitments and contingencies (see note 10)
Net Assets
Common stock, par value $0.01 per share, 200,000,000 and 200,000,000 common shares authorized, respectively, and 42,260,826 and 42,260,826 shares issued and outstanding, respectively	$	423		$	423
Paid-in capital in excess of par		936,999			936,999
Accumulated distributable net loss		(111,005	)		(95,141	)

Total net assets	$	826,417		$	842,281

Net Asset Value Per Share	$	19.56		$	19.93

See notes to consolidated financial statements.

SLR INVESTMENT CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except share amounts)


	Three months ended
	March 31, 2022			March 31, 2021
INVESTMENT INCOME:
Interest:
Companies less than 5% owned	$	20,662		$	20,832
Companies more than 25% owned		2,561			2,885
Dividends:
Companies less than 5% owned		—			133
Companies more than 25% owned		9,715			9,575
Other income:
Companies less than 5% owned		63			2,462
Companies more than 25% owned		5			—

Total investment income		33,006			35,887

EXPENSES:
Management fees (see note 3)	$	7,216		$	6,810
Performance-based incentive fees (see note 3)		—			3,867
Interest and other credit facility expenses (see note 7)		8,328			7,229
Administrative services expense (see note 3)		1,183			1,360
Other general and administrative expenses		2,801			1,155

Total expenses		19,528			20,421

Net investment income	$	13,478		$	15,466

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND CASH EQUIVALENTS:
Net realized gain (loss) on investments and cash equivalents (companies less than 5% owned)	$	30		$	(366	)

Net change in unrealized gain (loss) on investments and cash equivalents:
Companies less than 5% owned		(13,498	)		6,046
Companies more than 25% owned		1,453			364

Net change in unrealized gain (loss) on investments and cash equivalents		(12,045	)		6,410

Net realized and unrealized gain (loss) on investments and cash equivalents		(12,015	)		6,044

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	1,463		$	21,510

EARNINGS PER SHARE (see note 5)	$	0.04		$	0.51

See notes to consolidated financial statements.

SLR INVESTMENT CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (unaudited)

(in thousands, except share amounts)


	Three months ended
	March 31, 2022			March 31, 2021
Increase (decrease) in net assets resulting from operations:
Net investment income	$	13,478		$	15,466
Net realized gain (loss)		30			(366	)
Net change in unrealized gain (loss)		(12,045	)		6,410

Net increase in net assets resulting from operations		1,463			21,510

Distributions to stockholders:
From net investment income		(17,327	)		(17,327	)

Capital transactions (see note 12):
Net increase in net assets resulting from capital transactions		—			—

Total increase (decrease) in net assets		(15,864	)		4,183
Net assets at beginning of period		842,281			852,023

Net assets at end of period	$	826,417		$	856,206

Capital stock activity (see note 12):
Net increase from capital stock activity		—			—

See notes to consolidated financial statements.

SLR INVESTMENT CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands)


	Three months ended
	March 31, 2022			March 31, 2021
Cash Flows from Operating Activities:
Net increase in net assets resulting from operations	$	1,463		$	21,510
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by (used in) operating activities:
Net realized (gain) loss on investments and cash equivalents		(30	)		366
Net change in unrealized (gain) loss on investments		12,045			(6,410	)
(Increase) decrease in operating assets:
Purchase of investments		(67,521	)		(98,715	)
Proceeds from disposition of investments		100,980			65,514
Net accretion of discount on investments		(1,540	)		(1,654	)
Capitalization of payment-in-kind income		(692	)		(1,737	)
Collections of payment-in-kind income		867			23
Receivable for investments sold		643			(701	)
Interest receivable		(723	)		(397	)
Dividends receivable		27			(1,581	)
Prepaid expenses and other assets		(360	)		(181	)
Increase (decrease) in operating liabilities:
Payable for investments and cash equivalents purchased		259,829			(29,997	)
Management fee payable		(219	)		275
Performance-based incentive fee payable		(1,864	)		3,075
Administrative services expense payable		(2,169	)		(951	)
Interest payable		3,570			3,307
Other liabilities and accrued expenses		(503	)		173
Deferred financing costs		427			394

Net Cash Provided by (Used in) Operating Activities		304,230			(47,687	)

Cash Flows from Financing Activities:
Cash distributions paid		(34,654	)		(17,327	)
Proceeds from unsecured borrowings		134,968			—
Proceeds from secured borrowings		57,425			146,000
Repayment of secured borrowings		(196,000	)		(112,000	)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller Reporting company

Emerging growth company

SEC Form 10-Q filed by SLR Investment Corp.