SLRC - SLR Investment Corp. Announces Quarter and Year Ended December 31 2023 Financial Results | Benzinga
Net Investment Income of $0.44 Per Share for Q4 2023;
Declared Quarterly Distribution of $0.41 Per Share;
Stable NAV and Strong Portfolio Credit Quality
NEW YORK, Feb. 27, 2024 (GLOBE NEWSWIRE) -- SLR Investment Corp. (NASDAQ:SLRC) (the "Company", "SLRC", "we", or "our") today reported net investment income of $23.9 million, or $0.44 per share, for the fourth quarter of 2023.
As of December 31, 2023, net asset value (NAV) was $18.09 per share, compared to $18.06 as of September 30, 2023.
In the fourth quarter of 2023, the Company returned to making quarterly, rather than monthly, distributions to shareholders and distributed $0.41 per share to shareholders on December 28, 2023. On February 27, 2024, the Board declared a quarterly distribution of $0.41 per share payable on March 28, 2024, to holders of record as of March 14, 2024.
"We are pleased to report a 7.3% increase year-over-year in our quarterly net investment income (NII) per share, which represents the fourth consecutive quarter of NII growth," said Michael Gross, the Company's Co-CEO. "Originations in 2023 represented a record high for SLRC. When coupled with record repayments for the year, our portfolio experienced healthy turnover and allowed us to take advantage of an attractive investment environment."
"We believe our 2023 investments represent an attractive vintage and should produce strong risk-adjusted returns," said Bruce Spohler, Co-CEO. "We were successful in further ramping the SLR Senior Lending Program, which contributed to an expansion in our NII. Additionally, we continue to believe the performance and financial condition of our portfolio companies remains solid, with credit quality metrics remaining strong as evidenced by the sequential increase in net asset value and low levels of non-accruals."
FINANCIAL HIGHLIGHTS FOR QUARTER AND YEAR ENDED DECEMBER 31, 2023:
At December 31, 2023:
Net assets: $986.6 million | Net asset value per share: $18.09
Leverage: 1.19x net debt-to-equity
Operating Results for the Quarter Ended December 31, 2023:
Net investment income: $23.9 million | Net investment income per share: $0.44
Net realized and unrealized loss: $0.3 million | Net realized and unrealized loss per share: $0.01
Net increase in net assets from operations: $23.6 million | Net increase in net assets per share: $0.43
Operating Results for the Year Ended December 31, 2023:
Net investment income: $92.1 million | Net investment income per share: $1.69
Net realized and unrealized loss: $15.7 million | Net realized and unrealized loss per share: $0.29
Net increase in net assets from operations: $76.4 million | Net increase in net assets per share: $1.40
COMPREHENSIVE PORTFOLIO(1) HIGHLIGHTS AND ACTIVITY(2) FOR QUARTER AND YEAR ENDED DECEMBER 31, 2023:
At December 31, 2023:
Portfolio fair value: $3.1 billion
Number of unique issuers: approximately 790
For the Quarter Ended December 31, 2023:
Investments made during the quarter: $449.8 million
Investments prepaid and sold during the quarter: $462.1 million
For the Year Ended December 31, 2023:
Investments made during the year: $1,475.8 million
Investments prepaid and sold during the year: $1,343.7 million
(1) The Comprehensive Investment Portfolio for the quarter and year ended December 31, 2023 is comprised of SLRC's investment portfolio and SLR Credit Solutions' ("SLR-CS") full portfolio, SLR Equipment Finance's ("SLR-EF") full portfolio, Kingsbridge Holdings, LLC's ("KBH") full portfolio, SLR Business Credit's ("SLR-BC") full portfolio, SLR Healthcare ABL's ("SLR-HC ABL") full 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 and SLR-EF.
(2) Comprehensive Portfolio Activity for the quarter and year ended December 31, 2023, 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, 2023, SLRC had Comprehensive Portfolio originations of $449.8 million and repayments of $462.1 million across the Company's four investment strategies:
| For the Quarter Ended December 31, 2023 () |
| Asset Class |
| Sponsor Finance(1) |
| Asset-based Lending(2) |
| Equipment Finance(3) |
| Life Science Finance |
| Total Comprehensive Investment Portfolio Activity |
| Originations |
| $107.0 |
| $150.4 |
| $154.3 |
| $38.1 |
| $449.8 |
| Repayments / Amortization |
| $185.0 |
| $165.6 |
| $105.8 |
| $5.7 |
| $462.1 |
| Net Portfolio Activity |
| $(78.0) |
| $(15.2) |
| $48.5 |
| $32.4 |
| $(12.3) |
During the year ended December 31, 2023, SLRC had Comprehensive Portfolio originations of $1,475.8 million and repayments of $1,343.7 million across the Company's four investment strategies:
| For the Year Ended December 31, 2023 () |
| Asset Class |
| Sponsor Finance(1) |
| Asset-based Lending(2) |
| Equipment Finance(3) |
| Life Science Finance |
| Total Comprehensive Investment Portfolio Activity |
| Originations |
| $452.2 |
| $416.0 |
| $525.5 |
| $82.1 |
| $1,475.8 |
| Repayments / Amortization |
| $355.5 |
| $467.8 |
| $467.3 |
| $53.1 |
| $1,343.7 |
| Net Portfolio Activity |
| $96.7 |
| $(51.8) |
| $58.2 |
| $29.0 |
| $132.1 |
(1) Sponsor Finance refers to cash flow loans to sponsor-owned companies including cash flow loans held in the SLR Senior Lending Program LLC attributable to the Company.
(2) Includes SLR-CS, SLR-BC and SLR-HC ABL's full portfolios, as well as asset-based loans on the Company's balance sheet.
(3) Includes SLR-EF's full portfolio and equipment financings on the Company's balance sheet and Kingsbridge Holdings' (KBH) full portfolio.
Comprehensive Portfolio Composition
The Comprehensive Investment Portfolio is diversified across approximately 790 unique issuers, operating in over 110 industries, and resulting in an average exposure of $3.9 million or 0.1% per issuer. As of December 31, 2023, 99.2% of the Company's Comprehensive Investment Portfolio was invested in senior secured loans of which 97.7% is held in first lien senior secured loans. Second lien ABL exposure is 1.2% and second lien cash flow exposure is 0.3% of the Comprehensive Investment Portfolio at December 31, 2023.
SLRC's Comprehensive Investment Portfolio composition by asset class as of December 31, 2023 was as follows:
| Comprehensive Investment Portfolio Composition (at fair value) |
| Amount |
| Weighted Average Asset Yield(5) |
| () |
| % |
| Senior Secured Investments Cash Flow Loans (Sponsor Finance)(1) |
| $729.9 |
| 23.6% |
| 11.9% |
| Asset-Based Loans(2) |
| $980.8 |
| 31.6% |
| 14.5% |
| Equipment Financings(3) |
| $1,003.2 |
| 32.4% |
| 8.1% |
| Life Science Loans |
| $359.2 |
| 11.6% |
| 13.0% |
| Total Senior Secured Investments |
| $3,073.1 |
| 99.2% |
| 11.6% |
| Equity and Equity-like Securities |
| $24.3 |
| 0.8% |
| Total Comprehensive Investment Portfolio |
| $3,097.4 |
| 100.0% |
| Floating Rate Investments(4) |
| $2,009.1 |
| 65.3% |
| First Lien Senior Secured Loans |
| $3,027.8 |
| 97.7% |
| Second Lien Senior Secured Cash Flow Loans |
| $7.8 |
| 0.3% |
| Second Lien Senior Secured Asset-Based Loans |
| $37.5 |
| 1.2% |
(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 full 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 full portfolio and equipment financings on the Company's balance sheet and Kingsbridge Holdings' (KBH) full 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 yield calculation of Life Science loans excludes the impact of success fees and/or warrants. 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 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 ending on December 31, 2023 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 ending on December 31, 2023 against the portfolio as of December 31, 2023, annualized. The weighted average yield for the KBH equipment leasing portfolio represents the expected return on equity during 2023.
SLR Investment Corp. Portfolio
Asset Quality
As of December 31, 2023, 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, 2023, the composition of our Investment Portfolio, on a risk ratings basis, was as follows:
| Internal Investment Rating |
| Investments at Fair Value () |
| % of Total Portfolio |
| 1 |
| $674.6 |
| 31.3% |
| 2 |
| $1,422.6 |
| 66.0% |
| 3 |
| $49.8 |
| 2.3% |
| 4 |
| $7.8 |
| 0.4% |
Investment Income Contribution by Asset Class
| Investment Income Contribution by Asset Class(1) () |
| For the Quarter Ended: |
| Sponsor Finance |
| Asset-based Lending |
| Equipment Finance |
| Life Science Finance |
| Total () |
| 12/31/2023 |
| $22.9 |
| $14.2 |
| $9.7 |
| $13.0 |
| $59.8 |
| % Contribution |
| 38.2% |
| 23.7% |
| 16.3% |
| 21.8% |
| 100.0% |
| Investment Income Contribution by Asset Class(1) () |
| For the Year Ended: |
| Sponsor Finance |
| Asset-based Lending |
| Equipment Finance |
| Life Science Finance |
| Total () |
| 12/31/2023 |
| $85.9 |
| $55.3 |
| $38.1 |
| $50.0 |
| $229.3 |
| % Contribution |
| 37.5% |
| 24.1% |
| 16.6% |
| 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.