SLR Senior Investment Corp. (NASDAQ: SUNS) (the “Company” “SLR
Senior” or “SUNS”) today reported net investment income
of $4.0 million, or $0.25 per average share, for the quarter
ended June 30, 2021.
At June 30, 2021, net asset value (NAV) was
$15.87 per share. As of June 30, 2021, 100% of SLR Senior’s
portfolio was performing.
The Company’s Board of Directors declared a
monthly distribution for August 2021 of $0.10 per share payable
on September 3, 2021 to stockholders of record
on August 19, 2021. Tax characteristics of all distributions
will be reported to shareholders on Form 1099 after the end of the
calendar year.
HIGHLIGHTS:
At June 30, 2021:
Comprehensive
Investment portfolio* fair value: $570 million
Number of portfolio
companies*: 230
Net assets: $254.8
million
Net asset value per
share: $15.87
Net Debt to Equity:
0.51x
Available Capital**:
$329 million, subject to borrowing base availability
Comprehensive Portfolio Activity*** for
the Quarter Ended June 30, 2021
Investments made during
the quarter: $127.5 million
Investments repaid or
sold during the quarter: $52.1 million
Operating Results for the Quarter Ended
June 30, 2021
Net investment income:
$4.0 million
Net investment income
per share: $0.25
Net realized and
unrealized gain: $0.3 million
Net increase in net
assets from operations: $4.2 million
Earnings per share:
$0.26
* The Comprehensive Investment Portfolio is
comprised of SLR Senior Investment Corp.’s investment portfolio,
SLR Healthcare ABL’s (“Healthcare ABL”) full portfolio and SLR
Business Credit’s (“Business Credit”) full portfolio, and excludes
the Company’s fair value of its equity interest in Healthcare ABL
and Business Credit.
** See Liquidity and Capital Resources
*** Comprehensive Portfolio Activity includes
gross originations/repayments through Healthcare ABL and Business
Credit.
“We are pleased with the 15% growth in SUNS’
comprehensive portfolio during the second quarter, predominantly
driven by an increase in our asset-based lending verticals,” said
Michael Gross, Co-CEO of SLR Senior Investment Corp. “Additionally,
net investment income increased 25%, and we are optimistic about
further earnings growth in the coming quarters.”
“We anticipate meaningful portfolio growth
during the second half of 2021 as we execute on our robust
pipeline. Our sponsor finance business is capitalizing on increased
middle-market deal volume, supported by the rebounding U.S.
economy, and our specialty finance businesses are seeing greater
capital needs from their borrowers as government stimulus tapers
off,” said Bruce Spohler, Co-CEO of SLR Senior Investment Corp.
Conference Call and Webcast The
Company will host an earnings conference call and audio webcast at
11:00 a.m. (Eastern Time) on Wednesday, August 4, 2021. All
interested parties may participate in the conference call by
dialing (844) 889-7785 approximately 5-10 minutes prior to the
call, international callers should dial (661) 378-9929.
Participants should reference SLR Senior Investment Corp. and the
participant passcode of 6177099 when prompted. A telephone replay
will be available until August 18, 2021 and can be accessed by
dialing (855) 859-2056 and using the passcode 6177099.
International callers should dial (404) 537-3406. This conference
call will also be broadcast live over the Internet and can be
accessed by all interested parties through SLR Senior Investment’s
website, www.slrseniorinvestmentcorp.com. To listen to the webcast,
please go to the Company's website prior to the start of the call
to register and download any necessary audio software. For those
who are not able to listen to the live broadcast, a replay of the
webcast will be available soon after the call.
Comprehensive Investment Portfolio
Investment Activity
During the quarter ended June 30, 2021, SLR
Senior had total originations of $127.5 million and repayments of
$52.1 million across the Company’s core businesses comprised of
senior secured cash flow, traditional asset-based lending,
healthcare asset-based lending, and life science finance resulting
in net portfolio growth of $75.4 million to the comprehensive
portfolio.
The investment activity of our Comprehensive
Investment Portfolio for the quarter ended June 30, 2021 was as
follows:
Comprehensive Investment Portfolio
Activity(1) Q2 2021 (in
millions) |
Asset Classes |
Cash Flow Loans |
Asset-Based Loans
(Business Credit) |
Asset-Based Healthcare Loans (Healthcare ABL) |
Life Science |
Total Portfolio
Activity |
Originations |
$35.5 |
$81.9 |
$10.1 |
$0.0 |
$127.5 |
Repayments / Amortization |
$31.5 |
$10.0 |
$2.3 |
$8.3 |
$52.1 |
Net Portfolio Activity |
$4.0 |
$71.9 |
$7.8 |
($8.3) |
$75.4 |
(1) Portfolio activity includes gross
originations/repayments across each business unit.
Portfolio Composition
Our Comprehensive Investment Portfolio composition
by business unit at June 30, 2021 was as follows:
Comprehensive Investment Portfolio Composition (at
fair value) |
Amount |
Weighted Average Asset-level
Yield |
($mm) |
% |
First Lien Senior Secured Loans |
|
|
|
Cash Flow
1st Lien Senior Secured Loans |
$244.7 |
42.9% |
6.7%5 |
Traditional
Asset-Based 1st Lien Senior Secured Loans(1) (Business Credit) |
$227.0 |
39.8% |
12.6%6 |
Healthcare
Asset-Based 1st Lien Senior Secured Loans(2) (Healthcare ABL) |
$73.2 |
12.8% |
11.9%6 |
Life Science 1st Lien Senior Secured Loans |
$25.0 |
4.4% |
9.6%7 |
Total First Lien Senior Secured Loans |
$569.9 |
>99.9% |
9.8% |
Equity and Equity-like Securities(3) |
$0.3 |
<0.1% |
|
Total Comprehensive Investment Portfolio |
$570.2 |
100.0% |
|
Floating Rate Investments(4) |
$554.0 |
97.2% |
|
(1) Includes Business Credit’s full portfolio, all of which are
1st lien senior secured loans.(2) Includes Healthcare ABL’s full
portfolio, all of which are 1st lien senior secured loans.(3)
Excludes the Company’s equity investments in Business Credit and
Healthcare ABL, which distribute quarterly dividends to the
Company.(4) Floating rate investments calculated as a percent of
the Company’s income-producing Comprehensive Investment
Portfolio.(5) Represents the weighted average of each individual
loan’s yield to maturity based on fair value at June 30, 2021.(6)
Represents total interest and fee income for the three-month period
ending on June 30, 2021 against the average portfolio over the same
fiscal period, annualized.(7) Represents the weighted average of
each individual loan’s yield to maturity based on fair value at
June 30, 2021 (excluding exit fees or warrants).
The Comprehensive Investment Portfolio is diversified across 230
unique borrowers in 110 industries. The average issuer exposure is
$2.5 million, or less than 0.5% of the comprehensive portfolio.
As of June 30, 2021, more than 99.9% of the
Comprehensive Portfolio was invested in first lien senior secured
cash flow and asset-based loans and less than 0.1% is in equity.
Over 97% of SUNS’ portfolio is floating rate.
The weighted average yield at fair value of all
income-producing investments in the Comprehensive Portfolio was
9.8% at June 30, 2021.
SLR Senior Investment Corp.
Portfolio
Asset Quality
At June 30, 2021, 100% of the Company’s
portfolio was performing with no investments on non-accrual.
The Company puts its greatest emphasis on risk
mitigation and credit performance. On a quarterly basis, or more
frequently if deemed necessary, the Company formally rates each
portfolio investment on a scale of one to four, with one
representing the least amount of risk.
As of June 30, 2021, the composition of our
portfolio, on a risk ratings basis, was as follows:
Internal Investment Rating |
Investments at Fair Value ($mm) |
% of SUNS Portfolio |
1 |
$66.4 |
17.4% |
2 |
$296.4 |
77.4% |
3 |
$20.1 |
5.2% |
4 |
$0.0 |
0.0% |
Investment Income Contribution by Business
Unit
Business Unit Contribution to Gross Investment
Income Q2 2021(1) (in
millions) |
For the Quarter Ended: |
Cash Flow Lending |
Asset-based Lending
(Business Credit) |
Asset-based Healthcare Lending (Healthcare
ABL) |
Life Science |
Total |
June 30, 2021 |
$4.1 |
$1.3 |
$0.9 |
$1.2 |
$7.5 |
% Contribution |
55% |
17% |
12% |
16% |
100% |
(1) Investment Income Contribution by
Business Unit includes interest income/fees from cash flow and life
science loans on balance sheet and distributions from Business
Credit and Healthcare ABL.
SLR Senior Investment Corp.’s Results of
Operations for the Quarter Ended June 30, 2021 compared to the
Quarter Ended June 30, 2020:
Investment Income
For the quarters ended June 30, 2021 and 2020,
gross investment income totaled $7.5 million and $7.9 million,
respectively. The decrease in gross investment income for the year
over year three month periods was primarily due to a reduction in
the size of the income producing portfolio.
Expenses
For the quarters ended June 30, 2021 and 2020,
net expenses totaled $3.6 million and $2.8 million, respectively.
For the quarters ended June 30, 2021 and 2020, $0.0 million and
$1.0 million, respectively, of management and performance-based
incentive fees were voluntarily waived by the Company’s investment
manager. The increase in net expenses year over year is primarily
due to a decrease in the waivers of fees.
Net Investment Income
The Company’s net investment income totaled $4.0
million and $5.1 million, or $0.25 and $0.32 per average share,
respectively, for the quarters ended June 30, 2021 and 2020.
Net Realized and Unrealized
Gain
Net realized and unrealized gain for the
quarters ended June 30, 2021 and 2020 totaled $0.3 million and
$15.4 million, respectively.
Net Increase in Net Assets Resulting from
Operations
For the quarters ended June 30, 2021 and 2020,
the Company had a net increase in net assets resulting from
operations of $4.2 million and $20.5 million, respectively. For the
quarters ended June 30, 2021 and 2020, earnings per average share
were $0.26 and $1.28, respectively.
Liquidity and Capital
Resources
Unsecured Debt At June 30, 2021, approximately 62%
of the Company’s funded debt, or $85 million, was comprised of
unsecured notes.
Credit Facilities and Available Capital At June
30, 2021, the Company had $51.3 million of borrowings under its
$231 million of bank facilities, resulting in a total of $136.3
million of funded debt and $179.5 million of available capital,
subject to borrowing base limits. When including undrawn capital on
the SLR Business Credit and SLR Healthcare ABL credit facilities,
total available capital is $329 million, subject to borrowing base
availability, at June 30, 2021. During Q2 2021, the Company amended
its credit facility, extending its final maturity to June 2026.
Leverage As of June 30, 2021, the Company’s net
debt to equity ratio was 0.51x. The Company’s low leverage provides
a significant cushion to its regulatory asset coverage limit of
2.0x debt-to-equity as well as its target leverage ratio of
1.25–1.50x debt-to-equity.
Unfunded Commitments As of June 30, 2021,
excluding commitments to SLR Healthcare ABL, SLR Senior Investment
Corp. had unfunded commitments of approximately $35.8 million,
including unfunded revolver commitments of approximately $8.6
million.
Financial Statements and
Tables
SLR Senior Investment Corp.
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except share amounts)
|
June 30, 2021 (unaudited) |
|
|
December 31, 2020 |
|
Assets |
|
|
Investments
at fair value: |
|
|
Companies less than 5% owned (cost: $272,310 and $251,163,
respectively) |
$ |
270,017 |
|
|
$ |
246,963 |
|
Companies more than 25% owned (cost: $117,439 and $98,439,
respectively) |
|
112,867 |
|
|
|
93,867 |
|
Cash |
|
7,489 |
|
|
|
3,851 |
|
Cash
equivalents (cost: $199,994 and $299,998,
respectively) |
|
199,994 |
|
|
|
299,998 |
|
Interest
receivable |
|
1,527 |
|
|
|
1,373 |
|
Dividends
receivable |
|
1,753 |
|
|
|
1,753 |
|
Receivable
for investments
sold |
|
6 |
|
|
|
— |
|
Prepaid
expenses and other
assets |
|
326 |
|
|
|
192 |
|
Total
assets |
$ |
593,979 |
|
|
$ |
647,997 |
|
|
|
|
Liabilities |
|
|
Debt
($136,303 and $90,403 face amounts, respectively, reported net of
unamortized debt issuance costs of $1,974 and $1,910,
respectively.) |
$ |
134,329 |
|
|
$ |
88,493 |
|
Payable for
investments and cash equivalents
purchased |
|
199,994 |
|
|
|
299,998 |
|
Distributions
payable |
|
1,605 |
|
|
|
1,605 |
|
Management
fee payable |
|
961 |
|
|
|
— |
|
Interest
payable |
|
1,205 |
|
|
|
1,312 |
|
Administrative services
payable |
|
389 |
|
|
|
646 |
|
Other
liabilities and accrued
expenses |
|
725 |
|
|
|
539 |
|
Total
liabilities |
$ |
339,208 |
|
|
$ |
392,593 |
|
|
|
|
|
|
|
Net
Assets |
|
|
Common
stock, par value $0.01 per share, 200,000,000 and 200,000,000
common shares authorized, respectively, and 16,049,034 and
16,049,034 issued and outstanding,
respectively |
$ |
160 |
|
|
$ |
160 |
|
Paid-in
capital in excess of
par |
|
274,205 |
|
|
|
274,205 |
|
Accumulated
distributable net
loss |
|
(19,594 |
) |
|
|
(18,961 |
) |
Total net
assets |
$ |
254,771 |
|
|
$ |
255,404 |
|
Net Asset Value Per
Share |
$ |
15.87 |
|
|
$ |
15.91 |
|
|
|
|
SLR Senior Investment Corp.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except share amounts)
|
|
|
|
|
|
|
Three months ended |
|
|
June 30, 2021 |
|
|
June 30, 2020 |
INVESTMENT INCOME: |
|
|
|
|
|
Interest: |
|
|
|
|
|
Companies less than 5%
owned |
$ |
5,350 |
|
$ |
5,650 |
Dividends: |
|
|
|
|
|
Companies more than 25%
owned |
|
2,125 |
|
|
2,125 |
Other
income: |
|
|
|
|
|
Companies less than 5%
owned |
|
47 |
|
|
83 |
Total investment
income |
|
7,522 |
|
|
7,858 |
|
|
|
|
|
|
EXPENSES: |
|
|
|
|
|
Management
fees |
$ |
961 |
|
$ |
1,040 |
Performance-based incentive
fees |
|
— |
|
|
39 |
Interest and
other credit facility
expenses |
|
1,713 |
|
|
2,072 |
Administrative services
expense |
|
442 |
|
|
367 |
Other
general and administrative
expenses |
|
435 |
|
|
204 |
Total expenses |
|
3,551 |
|
|
3,722 |
Management
fees waived |
|
— |
|
|
(920) |
Performance-based incentive fees
waived |
|
— |
|
|
(39) |
Net expenses |
|
3,551 |
|
|
2,763 |
Net investment
income |
$ |
3,971 |
|
$ |
5,095 |
|
|
|
|
|
|
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, CASH
EQUIVALENTS AND UNFUNDED COMMITMENTS: |
|
|
|
|
|
Net realized
loss on investments and cash equivalents (companies less than 5%
owned) |
$ |
(6) |
|
$ |
(12) |
Net change
in unrealized gain on investments, cash equivalents and unfunded
commitments: |
|
|
|
|
|
Companies less than 5%
owned |
|
272 |
|
|
12,804 |
Companies more than 25%
owned |
|
— |
|
|
2,600 |
|
|
|
|
|
|
Net change in unrealized gain on investments, cash equivalents and
unfunded commitments |
|
272 |
|
|
15,404 |
Net realized and unrealized gain on investments, cash equivalents
and unfunded
commitments |
|
266 |
|
|
15,392 |
|
|
|
|
|
|
NET
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS |
$ |
4,237 |
|
$ |
20,487 |
EARNINGS PER
SHARE |
$ |
0.26 |
|
$ |
1.28 |
|
|
|
|
|
|
About SLR Senior Investment
Corp.
SLR Senior Investment Corp. is a closed-end
investment company that has elected to be treated as a business
development company under the Investment Company Act of 1940. A
specialty finance company with expertise in several niche markets,
the Company primarily invests directly and indirectly in leveraged,
U.S. middle market companies primarily in the form of cash flow
first lien senior secured debt instruments and asset-based loans
including senior secured loans collateralized on a first lien basis
primarily by current assets.
Forward-Looking Statements
Statements included herein may constitute
“forward-looking statements,” which relate to future events or our
future performance or financial condition. These statements are not
guarantees of our future performance, financial condition or
results and involve a number of risks and uncertainties, including
the impact of COVID-19 and related changes in base interest rates
and significant market volatility on our business, our portfolio
companies and the global economy. Actual results may differ
materially from those in the forward-looking statements as a result
of a number of factors, including those described from time to time
in our filings with the Securities and Exchange Commission. SLR
Senior Investment Corp. undertakes no duty to update any
forward-looking statements made herein.
Contact Investor Relations (646)
308-8770
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