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