SLR Investment Corp. Q3 FY2024 earnings call

• Net investment income was $0.45 per share for Q3 2024, with distribution coverage ~110%. Net asset value was $18.20 per share. • 78% of loan portfolio from specialty finance, 96% of Q3 originations in specialty finance. • Acquired an asset-based factoring portfolio and operations from Webster Bank’s Commercial Services division, a $124 million factoring portfolio with 14 professionals, adding to ABL portfolio. • Portfolio composition: ~97% first lien senior secured loans, low non-accrual rate (0.6% on cost, 0.4% on fair value). • $750 million+ available capital to deploy as of September 30.

SLR Investment Corp's third quarter 2024 had net investment income of $0.45 per share, consistent with prior quarter. Net asset value remained at $18.20 per share. Approximately 78% of the loan portfolio was from specialty finance investments supported by collateral, with the remainder in cash flow loans to recession-resilient industries. In specialty finance, 96% of third quarter originations were in specialty finance. The sponsor finance/cash flow lending portfolio was $714 million, representing 22.4% of the comprehensive portfolio, with a weighted average yield of 11.1%. The specialty finance segments: ABL portfolio was $1.1 billion, 35% of total portfolio, weighted average asset level yield 14.4%; equipment finance portfolio was $1.1 billion, 33% of comprehensive portfolio, weighted average asset level yield 9.4%; life sciences portfolio was $267 million, 8.4% of total portfolio, weighted average yield 12.6% (including potential success fees); SSLP earned $1.9 million, 15.7% annualized yield, fair value $204 million at quarter end.

• Expect increased return from Webster acquisition, targeting low to mid-teens ROE. • Optimistic sponsor finance conditions will improve next year as sponsors seek exits. • View SLRC as favorably positioned to deploy ~$750 million+ of available capital if economic conditions change.

• Sponsor finance market remains fiercely competitive. • Market expectations for forward interest rate curve are dynamic, posing challenge for private credit portfolio yields. • Concerns about credit quality in private credit portfolios.

Q: Thoughts on increased dividend or earnings from Webster acquisition?

A: Expect increased return, starting slower as integrate business, targeting low to mid-teens ROE on the investment.

Q: Leverage in SLR senior credit portfolio?

A: Leverage where they want it to be, will bump around as get repayments and add opportunistically.

Q: Elaborate on assets acquired in factoring portfolio?

A: All floating rate, diverse portfolio with 94 borrowers, average $1.3 million per borrower, low to mid-teens yields, stable long-standing relationships.

Q: Constrained by 30% cap?

A: Not constrained as BDC can put finco assets on parent balance sheet without utilizing 30%, and has over $14 billion of investable capital.

Q: Pathway for resolution on Rug Doctor non-accrual?

A: JV partner likely to acquire remaining interest long term, which would resolve the non-accrual situation