SLR Senior Investment Corp. (NASDAQ: SUNS) (the “Company” “SLR
Senior” or “SUNS”) today reported net investment income
of $3.2 million, or $0.20 per average share, for the quarter
ended March 31, 2021.
At March 31, 2021, net asset value (NAV) was
$15.91 per share, consistent with NAV at December 31, 2020.
As of March 31, 2021, 100% of SLR Senior’s
portfolio was performing.
The Company’s Board of Directors declared a
monthly distribution for May 2021 of $0.10 per share payable
on June 2, 2021 to stockholders of record on May 20,
2021. Tax characteristics of all distributions will be reported to
shareholders on Form 1099 after the end of the calendar year.
HIGHLIGHTS:
At March 31, 2021:
Comprehensive
Investment portfolio* fair value: $494 million
Number of portfolio
companies*: 203
Net assets: $255.3
million
Net asset value per
share: $15.91
Net Debt to Equity:
0.40x
Available Capital**:
Over $415 million, subject to borrowing base availability
Comprehensive Portfolio Activity*** for
the Quarter Ended March 31, 2021
Investments made during
the quarter: $47.6 million
Investments repaid or
sold during the quarter: $16.4 million
Operating Results for the Quarter Ended
March 31, 2021
Net investment income:
$3.2 million
Net investment income
per share: $0.20
Net realized and
unrealized gain: $1.6 million
Net increase in net
assets from operations: $4.8 million
Earnings per share:
$0.30
* 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.
“SUNS portfolio continued to perform well in Q1
reflecting our focus on first lien senior secured cash flow loans
and asset-based loans in our specialty finance verticals,” said
Michael Gross, Co-CEO of SUNS. “At March 31, 2021, 100% of our
investments were performing and Net Asset Value remained stable. We
have a solid portfolio foundation and available capital to take
advantage of today’s more attractive investment environment.”
“We are encouraged by the strength of the
current economic recovery and are seeing a pickup of middle market
M&A and refinancing activity during the first half of 2021,”
said Bruce Spohler, Co-CEO of SUNS. “We expect portfolio and
earnings growth in the coming quarters from our growing pipeline of
first lien cash flow and asset-based loan investment
opportunities.”
Conference Call and Webcast The
Company will host an earnings conference call and audio webcast at
11:00 a.m. (Eastern Time) on Thursday, May 6, 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 8429749 when prompted. A telephone replay will be
available until May 20, 2021 and can be accessed by dialing (855)
859-2056 and using the passcode 8429749. 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 March 31, 2021, SLR
Senior had total originations of $47.6 million and repayments of
$16.4 million across the Company’s core businesses comprised of
senior secured cash flow, traditional asset-based lending and
healthcare asset-based lending, resulting in net portfolio growth
of $31.2 million to the comprehensive portfolio.
The investment activity of our Comprehensive
Investment Portfolio for the quarter ended March 31, 2021 was as
follows:
Comprehensive Investment Portfolio
Activity(1) Q1 2021 (in
millions) |
Asset Classes |
Cash Flow Loans |
Asset-Based Loans
(BusinessCredit) |
Asset-BasedHealthcareLoans(HealthcareABL) |
Life Science |
Total Portfolio
Activity |
Originations |
$32.6 |
$7.2 |
$2.8 |
$5.0 |
$47.6 |
Repayments / Amortization |
$12.9 |
$0.8 |
$2.7 |
$0.0 |
$16.4 |
Net Portfolio Activity |
$19.7 |
$6.4 |
$0.1 |
$5.0 |
$31.2 |
(1) Portfolio activity includes gross
originations/repayments across each business unit.
Portfolio Composition
Our Comprehensive Investment Portfolio composition
by business unit at March 31, 2021 was as follows:
Comprehensive Investment PortfolioComposition (at
fair value) |
Amount |
WeightedAverage Asset-level
Yield |
($mm) |
% |
First Lien Senior Secured Loans |
|
|
|
Cash Flow
1st Lien Senior Secured Loans |
$239.7 |
48.5% |
6.7%5 |
Traditional
Asset-Based 1st Lien Senior Secured Loans(1) (Business Credit) |
$155.1 |
31.4% |
11.6%6 |
Healthcare
Asset-Based 1st Lien Senior Secured Loans(2) (Healthcare ABL) |
$65.5 |
13.2% |
14.9%6 |
Life Science 1st Lien Senior Secured Loans |
$33.7 |
6.8% |
8.9%7 |
Total First Lien Senior Secured Loans |
$494.0 |
>99.9% |
|
Cash Flow 2nd Lien Senior Secured Loans |
$0.0 |
0.0% |
n/a |
Total Senior Secured Loans |
$494.0 |
>99.9% |
9.5% |
Equity and Equity-like Securities(3) |
$0.2 |
<0.1% |
|
Total Comprehensive Investment Portfolio |
$494.2 |
100.0% |
|
Floating Rate Investments(4) |
$484.7 |
98.1% |
|
(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 yield to maturity based on
fair market value at March 31, 2021.(6) Represents total interest
and fee income for the three-month period ending on March 31, 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 March 31, 2021
(excluding exit fees or warrants).
The Comprehensive Investment Portfolio is
diversified across approximately 203 unique borrowers in over 115
industries. The average issuer exposure is $2.4 million, or less
than 0.5% of the comprehensive portfolio.
As of March 31, 2021, more than 99.9% of the
Comprehensive Portfolio was invested in first lien senior secured
cash flow and asset-based loans and 0.0% in second lien senior
secured cash flow loans, and less than 0.1% is in equity.
The weighted average yield at fair value of all
income-producing investments in the Comprehensive Portfolio was
9.5% at March 31, 2021.
SLR Senior Investment Corp.
Portfolio
Asset Quality
At March 31, 2021, 100% of the Company’s
portfolio was performing with no investments on non-accrual.
The Company puts its greatest emphasis on risk
mitigation and credit performance. On a quarterly basis, or more
frequently if deemed necessary, the Company formally rates each
portfolio investment on a scale of one to four, with one
representing the least amount of risk.
As of March 31, 2021, the composition of our
portfolio, on a risk ratings basis, was as follows:
Internal Investment Rating |
Investments at Fair Value ($mm) |
% of SUNS Portfolio |
1 |
$60.9 |
16.6% |
2 |
$298.4 |
81.2% |
3 |
$8.2 |
2.2% |
4 |
$0.0 |
0.0% |
Investment Income Contribution by Business
Unit
Business Unit Contribution to Gross Investment
Income Q1 2021(1) (in
millions) |
For the Quarter Ended: |
Cash Flow Lending |
Asset-based Lending
(BusinessCredit) |
Asset-basedHealthcareLending(Healthcare ABL) |
Life Science |
Total |
March 31, 2021 |
$3.7 |
$1.3 |
$0.9 |
$0.7 |
$6.6 |
% Contribution |
58% |
19% |
13% |
10% |
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 March 31, 2021 compared to the
Quarter Ended March 31, 2020:
Investment Income
For the quarters ended March 31, 2021 and 2020,
gross investment income totaled $6.6 million and $8.8 million,
respectively. The decrease in quarterly gross investment income
year over year was primarily due to a reduction in portfolio yield,
mainly as a result of the decrease in LIBOR, on a relatively
smaller income producing investment portfolio on average.
Expenses
Net expenses totaled $3.5 million and $3.1
million, respectively, for the quarters ended March 31, 2021 and
2020. For the quarters ended March 31, 2021 and March 31, 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 $3.2
million and $5.7 million, or $0.20 and $0.35 per average share,
respectively, for the quarters ended March 31, 2021 and 2020.
Net Realized and Unrealized Gain
(Loss)
Net realized and unrealized gain (loss) for the
quarters ended March 31, 2021 and 2020 totaled $1.6 million and
($27.7) million, respectively.
Net Increase (Decrease) in Net Assets
Resulting from Operations
For the quarters ended March 31, 2021 and 2020,
the Company had a net increase (decrease) in net assets resulting
from operations of $4.8 million and ($22.1) million, respectively.
For the quarters ended March 31, 2021 and 2020, earnings per
average share were $0.30 and ($1.37), respectively.
Liquidity and Capital
Resources
Unsecured Debt At March 31, 2021, approximately
76% of the Company’s funded debt, or $85 million, was comprised of
unsecured notes.
Credit Facilities and Available Capital At March
31, 2021, the Company had $26.2 million of borrowings under its
$300 million of revolving credit facilities, resulting in a total
of $111.2 million of funded debt and $273.8 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 over $415 million, subject
to borrowing base availability, at March 31, 2021.
Leverage As of March 31, 2021, the Company’s net
debt to equity ratio was 0.40x. 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 March 31, 2021,
excluding commitments to SLR Healthcare ABL, SLR Senior Investment
Corp. had unfunded commitments of approximately $27.3 million,
including unfunded revolver commitments of approximately $7.1
million.
Financial Statements and
Tables
|
SLR Senior
Investment Corp. CONSOLIDATED STATEMENTS OF ASSETS
AND LIABILITIES (in thousands, except share
amounts) |
|
|
|
|
|
|
|
|
|
March 31, 2021 (unaudited) |
|
December 31, 2020 |
Assets |
|
|
|
|
|
|
|
Investments
at fair value: |
|
|
|
|
|
|
|
Companies less than 5% owned (cost: $276,211 and $251,163,
respectively) |
$ |
273,646 |
|
|
$ |
246,963 |
|
Companies more than 25% owned (cost: $98,439 and $98,439,
respectively) |
|
93,867 |
|
|
|
93,867 |
|
Cash |
|
8,282 |
|
|
|
3,851 |
|
Cash
equivalents (cost: $275,000 and $299,998, respectively) |
|
275,000 |
|
|
|
299,998 |
|
Interest
receivable |
|
1,301 |
|
|
|
1,373 |
|
Dividends
receivable |
|
1,752 |
|
|
|
1,753 |
|
Prepaid
expenses and other assets |
|
376 |
|
|
|
192 |
|
Total assets |
$ |
654,224 |
|
|
$ |
647,997 |
|
Liabilities |
|
|
|
|
|
|
|
Debt
($111,203 and $90,403 face amounts, respectively, reported net of
unamortized debt issuance costs of $1,719 and $1,910,
respectively.) |
$ |
109,484 |
|
|
$ |
88,493 |
|
Payable for
investments and cash equivalents purchased |
|
285,432 |
|
|
|
299,998 |
|
Distributions payable |
|
1,605 |
|
|
|
1,605 |
|
Management
fee payable |
|
894 |
|
|
|
— |
|
Interest
payable |
|
495 |
|
|
|
1,312 |
|
Administrative services payable |
|
312 |
|
|
|
646 |
|
Other
liabilities and accrued expenses |
|
653 |
|
|
|
539 |
|
Total liabilities |
$ |
398,875 |
|
|
$ |
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 |
|
(19,016 |
) |
|
|
(18,961 |
) |
Total net assets |
$ |
255,349 |
|
|
$ |
255,404 |
|
Net Asset Value Per Share |
$ |
15.91 |
|
|
$ |
15.91 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SLR Senior
Investment Corp. CONSOLIDATED STATEMENTS OF
OPERATIONS (unaudited) (in thousands, except share
amounts) |
|
|
|
|
|
|
|
Three months ended |
|
March 31, 2021 |
|
March 31, 2020 |
INVESTMENT INCOME: |
|
|
|
|
|
Interest: |
|
|
|
|
|
Companies less than 5% owned |
$ |
4,498 |
|
|
$ |
6,623 |
|
Dividends: |
|
|
|
|
|
Companies more than 25% owned |
2,125 |
|
|
2,125 |
|
Other
income: |
|
|
|
|
|
Companies less than 5% owned |
4 |
|
|
27 |
|
Total investment income |
6,627 |
|
|
8,775 |
|
EXPENSES: |
|
|
|
|
|
Management
fees |
$ |
894 |
|
|
$ |
1,104 |
|
Performance-based incentive fees |
— |
|
|
56 |
|
Interest and
other credit facility expenses |
1,765 |
|
|
2,071 |
|
Administrative services expense |
438 |
|
|
367 |
|
Other
general and administrative expenses |
371 |
|
|
540 |
|
Total expenses |
3,468 |
|
|
4,138 |
|
Management
fees waived |
— |
|
|
|
(964 |
) |
Performance-based incentive fees waived |
— |
|
|
|
(56 |
) |
Net expenses |
3,468 |
|
|
3,118 |
|
Net investment income |
$ |
3,159 |
|
|
$ |
5,657 |
|
|
|
|
|
|
|
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, CASH
EQUIVALENTS AND UNFUNDED COMMITMENTS: |
|
|
|
|
|
|
|
Net realized
gain (loss) on investments and cash equivalents (companies less
than 5% owned) |
$ |
(34 |
) |
|
$ |
119 |
|
Net change
in unrealized gain (loss) on investments, cash equivalents and
unfunded commitments: |
|
|
|
|
|
Companies less than 5% owned |
1,635 |
|
|
|
(20,508 |
) |
Companies more than 25% owned |
— |
|
|
|
(7,333 |
) |
|
|
|
|
|
|
Net change in unrealized gain (loss) on investments, cash
equivalents and unfunded commitments |
1,635 |
|
|
|
(27,841 |
) |
Net realized and unrealized gain (loss) on investments, cash
equivalents and unfunded commitments |
1,601 |
|
|
|
(27,722 |
) |
|
|
|
|
|
|
NET
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS |
$ |
4,760 |
|
|
$ |
(22,065 |
) |
EARNINGS (LOSS) PER SHARE |
$ |
0.30 |
|
|
$ |
(1.37 |
) |
|
|
|
|
|
|
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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