SLR Investment Corp. Announces Quarter and Year Ended December 31, 2024 Financial Results
Net Investment Income of $0.44 Per Share for Q4 2024;
Declared Quarterly Distribution of $0.41 Per Share;
Stable NAV/Strong Credit Quality
NEW YORK, Feb. 25, 2025 (GLOBE NEWSWIRE) -- SLR Investment Corp. (NASDAQ:SLRC) (the "Company", "SLRC", "we", "us", or "our") today reported net investment income ("NII") of $23.8 million, or $0.44 per share, for the fourth quarter of 2024. On February 25, 2025, the Board declared a quarterly distribution of $0.41 per share payable on March 28, 2025, to holders of record as of March 14, 2025.
As of December 31, 2024, net asset value ("NAV") was $18.20 per share, unchanged from the prior quarter ended September 30, 2024.
"This month, SLRC celebrated its 15th anniversary since its initial public offering and more than 18 years of operating history as a private credit manager for SLR Capital Partners, our investment adviser," said Michael Gross, Co-CEO of SLR Investment Corp. "Since inception in 2010, SLRC has made approximately $7.5 billion of investments including five platform specialty finance acquisitions and four related tuck-in acquisitions. Our asset mix across specialty and sponsor finance investment strategies and conservative underwriting approach has created a differentiated and attractive risk-adjusted return profile compared to sponsor finance only portfolios."
"SLRC generated strong NII per share for both the fourth quarter and full year. In addition, NAV increased to $18.20 from $18.09 per share a year ago, reflecting solid credit performance from a diversified portfolio and disciplined underwriting in an environment of elevated rates and tighter cash flow coverage," said Bruce Spohler, Co-CEO of SLR Investment Corp. "The ongoing retreat of regional banks from asset-based lending has resulted in a significant pipeline of specialty finance investment opportunities. Our flexibility to pivot to the most attractive investment strategies allows us to protect capital and perform across market cycles."
FINANCIAL HIGHLIGHTS FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2024:
At December 31, 2024:
Investment portfolio fair value: $2.0 billion | Comprehensive Investment Portfolio fair value:(1) $3.1 billion
Net assets: $992.9 million or $18.20 per share
Leverage: 1.03x net debt-to-equity
Operating Results for the Quarter Ended December 31, 2024:
Net investment income: $23.8 million or $0.44 per share
Net realized and unrealized losses: $1.2 million or $0.02 per share
Net increase in net assets from operations: $22.6 million or $0.41 per share
Operating Results for the Year Ended December 31, 2024:
Net investment income: $96.3 million or $1.77 per share
Net realized and unrealized loss: $0.6 million or $0.01 per share
Net increase in net assets from operations: $95.8 million or $1.76 per share
Comprehensive Investment Portfolio Activity(2) for the Quarter and Year Ended December 31, 2024:
Investments made during the quarter: $338.4 million
Investments prepaid and sold during the quarter: $442.7 million
Investments made during the year: $1,352.6 million
Investments prepaid and sold during the year: $1,377.8 million
(1) The Comprehensive Investment Portfolio for the quarter ended December 31, 2024 is comprised of SLRC's investment portfolio and SLR Credit Solutions' ("SLR-CS") portfolio, SLR Equipment Finance's ("SLR-EF") portfolio, Kingsbridge Holdings, LLC's ("KBH") portfolio, SLR Business Credit's ("SLR-BC") portfolio, SLR Healthcare ABL's ("SLR-HC ABL") portfolio owned by the Company (collectively, the Company's "Commercial Finance Portfolio Companies"), and the senior secured loans held by the SLR Senior Lending Program LLC ("SSLP") attributable to the Company, and excludes the Company's fair value of the equity interests in SSLP and the Commercial Finance Portfolio Companies and also excludes SLRC's loans to KBH, SLR-EF, and SLR HC ABL.
(2) Comprehensive Investment Portfolio activity for the quarter ended December 31, 2024, includes investment activity of the Commercial Finance Portfolio Companies and SSLP attributable to the Company.
Comprehensive Investment Portfolio
Portfolio Activity
During the three months ended December 31, 2024, SLRC had Comprehensive Investment Portfolio originations of $338.4 million and repayments of $442.7 million across the Company's four investment strategies:
| For the Quarter Ended December 31, 2024 ($mm) | ||||||||||
| Asset Class | Sponsor Finance(1) | Asset-based Lending(2) | Equipment Finance(3) | Life Science Finance | Total Comprehensive Investment Portfolio Activity | |||||
| Originations | $20.7 | $128.6 | $182.5 | $6.6 | $338.4 | |||||
| Repayments / Amortization | $102.3 | $205.3 | $101.7 | $33.4 | $442.7 | |||||
| Net Portfolio Activity | ($81.6) | ($76.7) | $80.8 | ($26.8) | ($ 104.3) | |||||
During the year ended December 31, 2024, SLRC had Comprehensive Investment Portfolio originations of $1,352.6 million and repayments of $1,377.8 million across the Company's four investment strategies:
| For the Year Ended December 31, 2024 ($mm) | ||||||||||
| Asset Class | Sponsor Finance(1) | Asset-based Lending(2) | Equipment Finance(3) | Life Science Finance | Total Comprehensive Investment Portfolio Activity | |||||
| Originations | $113.0 | $555.7 | $649.4 | $34.5 | $1,352.6 | |||||
| Repayments / Amortization | $190.2 | $515.8 | $508.5 | $163.3 | $1,377.8 | |||||
| Net Portfolio Activity | ($77.2) | $39.9 | $140.9 | ($128.8) | ($ 25.2) | |||||
(1) Sponsor Finance refers to cash flow loans to sponsor-owned companies including cash flow loans held in SSLP attributable to the Company.
(2) Includes SLR-CS, SLR-BC and SLR-HC ABL's portfolios, as well as asset-based loans on the Company's balance sheet.
(3) Includes SLR-EF's portfolio and equipment financings on the Company's balance sheet and Kingsbridge Holdings' (KBH) portfolio.
Comprehensive Investment Portfolio Composition
The Comprehensive Investment Portfolio is diversified across approximately 890 unique issuers, operating in over 110 industries, and resulting in an average exposure of $3.5 million or 0.1% per issuer. As of December 31, 2024, 98.2% of the Company's Comprehensive Investment Portfolio was invested in senior secured loans of which 96.4% was held in first lien senior secured loans. Second lien ABL exposure was 1.5% and second lien cash flow exposure was 0.3% of the Comprehensive Investment Portfolio as of December 31, 2024.
SLRC's Comprehensive Investment Portfolio composition by asset class as of December 31, 2024 was as follows:
| Comprehensive Investment Portfolio Composition (at fair value) | Amount | Weighted Average | ||
| ($mm) | % | Asset Yield(5) | ||
| Senior Secured Investments | ||||
| Cash Flow Loans (Sponsor Finance)(1) | $633.8 | 20.6% | 10.6% | |
| Asset-Based Loans(2) | $1,037.3 | 33.6% | 14.6% | |
| Equipment Financings(3) | $1,147.9 | 37.2% | 10.7% | |
| Life Science Loans | $208.8 | 6.8% | 12.1% | |
| Total Senior Secured Investments | $3,027.8 | 98.2% | 12.1% | |
| Equity and Equity-like Securities | $54.8 | 1.8% | ||
| Total Comprehensive Investment Portfolio | $3,082.6 | 100.0% | ||
| Floating Rate Investments(4) | $1,866.7 | 61.0% | ||
| First Lien Senior Secured Loans | $2,972.1 | 96.4% | ||
| Second Lien Senior Secured Asset-Based Loans | $47.8 | 1.5% | ||
| Second Lien Senior Secured Cash Flow Loans | $7.8 | 0.3% | ||
(1) Includes cash flow loans held in the SSLP attributable to the Company and excludes the Company's equity investment in SSLP.
(2) Includes SLR-CS, SLR-BC, and SLR-HC ABL's portfolios, as well as asset-based loans on the Company's balance sheet, and excludes the Company's equity investments in each of SLR-CS, SLR-BC, and SLR-HC ABL.
(3) Includes SLR-EF's portfolio and equipment financings on the Company's balance sheet and Kingsbridge Holdings' (KBH) portfolio. Excludes the Company's equity and debt investments in each of SLR-EF and KBH.
(4) Floating rate investments are calculated as a percent of the Company's income-producing Comprehensive Investment Portfolio. The majority of fixed rate loans are associated with SLR-EF and leases held by KBH. Additionally, SLR-EF and KBH seek to match-fund their fixed rate assets with fixed rate liabilities.
(5) The weighted average asset yield for income producing cash flow, asset-based and life science loans on balance sheet is based on a yield to maturity calculation. The weighted average asset yield calculation for Life Science loans includes the amortization of expected exit/success fees. The weighted average yield for on-balance sheet equipment financings is calculated based on the expected average life of the investments. The weighted average asset yield for SLR-CS asset-based loans is an Internal Rate of Return (IRR) calculated using actual cash flows received and the expected terminal value. The weighted average asset yield for SLR-BC and SLR-HC ABL represents total interest and fee income for the three-month period ended on December 31, 2024 against the average portfolio over the same fiscal period, annualized. The weighted average asset yield for SLR-EF represents total interest and fee income for the three-month period ended on December 31, 2024 compared to the portfolio as of December 31, 2024, annualized. The weighted average yield for the KBH equipment leasing portfolio represents the blended yield from the company's 1st lien loan on par value and the annualized dividend yield on the cost basis of the company's equity investment as of December 31, 2024.
SLR Investment Corp. Portfolio
Asset Quality
As of December 31, 2024, 99.6% of SLRC's portfolio was performing on a fair value basis and 99.4% on a cost basis, with only one investment on non-accrual.
The Company puts its largest emphasis on risk control and credit performance. On a quarterly basis, or more frequently if deemed necessary, the Company formally rates each portfolio investment on a scale of one to four, with one representing the least amount of risk.
As of December 31, 2024, the composition of our investment portfolio, on a risk ratings basis, was as follows:
| Internal Investment Rating | Investments at Fair Value ($mm) | % of Total Portfolio | |
| 1 | $701.0 | 34.9% | |
| 2 | $1,286.9 | 64.2% | |
| 3 | $9.9 | 0.5% | |
| 4 | $7.8 | 0.4% | |
Investment Income Contribution by Asset Class
| Investment Income Contribution by Asset Class(1) ($mm) | |||||
| For the Quarter Ended: | Sponsor Finance | Asset-based Lending | Equipment Finance | Life Science Finance | Total |
| 12/31/2024 | $18.7 | $18.1 | $8.8 | $10.0 | $55.6 |
| % Contribution | 33.7% | 32.5% | 15.8% | 18.0% | 100.0% |
| Investment Income Contribution by Asset Class(1) ($mm) | |||||
| For the Year Ended: | Sponsor Finance | Asset-based Lending | Equipment Finance | Life Science Finance | Total |
| 12/31/2024 | $82.6 | $62.5 | $36.6 | $50.7 | $232.4 |
| % Contribution | 35.5% | 26.9% | 15.8% | 21.8% | 100.0% |
(1) Investment Income Contribution by Asset Class includes: interest income/fees from Sponsor Finance (cash flow) loans on balance sheet and distributions from SSLP; income/fees from asset-based loans on balance sheet and distributions from SLR-CS, SLR-BC, SLR-HC ABL; income/fees from equipment financings and distributions from SLR-EF and distributions from KBH; and income/fees from life science loans on balance sheet.
SLR Senior Lending Program LLC (SSLP)
As of December 31, 2024, the Company and its 50% partner, Sunstone Senior Credit L.P., had contributed combined equity capital of $95.8 million of a total equity commitment for $100 million to the SSLP. At year end, SSLP had total commitments of $189.8 million at par and total funded portfolio investments of $178.7 million at fair value, consisting of floating rate senior secured loans to 32 different borrowers and an average investment of $5.6 million per borrower. This compares to funded portfolio investments of $204.1 million at fair value across 37 different borrowers at September 30, 2024. During the quarter ended December 31, 2024, SSLP invested $2.0 million in 4 portfolio companies and had $27.7 million of investments repaid.
In Q4 2024, the Company earned income of $1.9 million from its investment in the SSLP, representing an annualized yield of 15.6% on the cost basis of the Company's investment, similar to Q3 2024.
SLR Investment Corp.'s Results of Operations Year Over Year
Investment Income
For the fiscal years ended December 31, 2024, and 2023, gross investment income totaled $232.4 million and $229.3 million, respectively. The increase in gross investment income for the year over year period was primarily due to an increase in dividend income from SSLP and our specialty finance company equity investments.
Expenses
SLRC's net expenses totaled $136.1 million and $137.2 million, respectively, for the fiscal years ended December 31, 2024, and 2023. The decrease in expenses from 2024 to 2023 was primarily due to lower interest expense on a decrease in average borrowings as well as a reduction in general and administrative expenses, partially offset by higher fees stemming from higher net investment income.
SLRC's investment adviser agreed to waive incentive fees resulting from income earned due to the accretion of the purchase price discount allocated to investments acquired in the Company's merger with SLR Senior Investment Corp., which closed on April 1, 2022. For the fiscal years ended December 31, 2024 and 2023, $153 thousand and $500 thousand, respectively, of such performance-based incentive fees were waived.
Net Investment Income
SLRC's net investment income totaled $96.3 million and $92.1 million, or $1.77 and $1.69, per average share, respectively, for the fiscal years ended December 31, 2024, and 2023.
Net Realized and Unrealized Loss
Net realized and unrealized loss for the fiscal years ended December 31, 2024 and 2023 totaled $0.6 million and $15.7 million, respectively.
Net Increase in Net Assets Resulting from Operations
For the fiscal years ended December 31, 2024, and 2023, the Company had a net increase in net assets resulting from operations of $95.8 million and $76.4 million, respectively. For the same periods, earnings per average share were $1.76 and $1.40, respectively.
Capital and Liquidity
Credit Facilities
As of December 31, 2024, the Company had $507 million drawn on $970 million of total commitments available on its revolving credit facilities and $140 million of term loans outstanding. In Q3 2024, the Company extended its SLRC revolver credit facility to a maturity of August 2029, increased the size, and lowered pricing. In Q4 2024, three new lenders were added to the SLRC revolving credit facility.
Unsecured Debt
On December 16, 2024, the Company closed a private offering of $49.0 million of the 2027 Series G Unsecured Notes with a fixed interest rate of 6.24% and a maturity date of December 16, 2027. As of December 31, 2024, the Company had $394 million of unsecured notes outstanding.
On February 18, 2025, the Company closed an additional private offering of $50.0 million of unsecured notes due 2028 with a fixed rate of interest of 6.14% and a maturity date of February 18, 2028.
Leverage
As of December 31, 2024, the Company's net debt-to-equity ratio was 1.03x and compared to 1.19x as of December 31, 2023 and the Company's target range of 0.9x to 1.25x.
Available Capital
As of December 31, 2024, including anticipated available borrowing capacity at the SSLP and our specialty finance portfolio companies, subject to borrowing base limits, SLRC, SSLP and our specialty finance portfolio companies had over $900 million of available capital in the aggregate.
Unfunded Commitments
As of December 31, 2024, excluding commitments to SLR-CS, SLR-BC, SLR-HC ABL, SLR Equipment Finance, and SSLP, over which the Company has discretion to fund, the Company had unfunded commitments of approximately $167.2 million.
Subsequent Events
On February 25, 2025, the Board declared a quarterly distribution of $0.41 per share payable on March 28, 2025, to holders of record as of March 14, 2025.
Conference Call and Webcast Information
The Company will host an earnings conference call and audio webcast at 10:00 a.m. (Eastern Time) on Wednesday, February 26, 2025. All interested parties may participate in the conference call by dialing (800) 579-2543 approximately 5-10 minutes prior to the call, international callers should dial (785) 424-1789. Participants should reference SLR Investment Corp. and Conference ID: SLRC4Q24. A telephone replay will be available until March 12, 2025 and can be accessed by dialing (800) 839-4568. International callers should dial (402) 220-2681.
This conference call will also be broadcast live over the Internet and can be accessed by all interested parties from the Event Calendar within the "Investors" tab of SLR Investment Corp.'s website, https://slrinvestmentcorp.com/Investors/Event-Calendar. Please register online prior to the start of the call. For those who are not able to listen to the broadcast live, a replay of the webcast will be available soon after the call.
Supplemental Information of SLR Investment Corp.'s Results of Operations Quarter Over Quarter
| Operating results: | Quarter Ended December 31, 2024 (unaudited) | Quarter Ended September 30, 2024 (unaudited) | |||||
| Interest income | $36,290 | $45,373 | |||||
| Dividend income | 16,502 | 12,578 | |||||
| Other income | 2,791 | 1,820 | |||||
| Total investment income | 55,583 | 59,771 | |||||
| Management fee | 7,739 | 7,893 | |||||
| Net Performance-based Incentive fee | 5,920 | 6,036 | |||||
| Interest and other credit facility expenses | 16,184 | 18,913 | |||||
| Administrative services expense | 1,376 | 1,392 | |||||
| Other general and administrative expenses | 572 | 1,189 | |||||
| Net expenses | 31,791 | ||||||