SLR Investment (SLRC) 4 May 222022 Q1 Earnings call transcript

Good day and thank you for standing by. Welcome to the Q1 2022 SLR Investment Corp. Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to speaker today Michael Gross, Chairman and Co-CEO. Please go ahead.

and much very you, good morning. Thank SLR quarter ended to Investment Corp.’s first the for call March earnings Welcome XX, XXXX. I’m Chief Spohler, Rich joined our Co-Chief Executive Bruce today Officer; Peteka, Financial our Officer. by and and begin, would start the Rich, before forward-looking you we statements. by please covering webcast

the relate and performance, of result our or results. within Investment These any conference not differ To statements please our is and of our to results are factors, going constitute forward-looking website involve visit in a they number with indicative the anticipated to guarantee impacts being would or and Of I so available call in realize (XXX) unless from our the include of customary the and of form from associated are a specifically merger, results forward-looking distributions of past dividends performance Actual condition dividends including made to X, forward-looking and no synergies of Please will webcast on in prohibited. us call law. close our of Investment in a our time forward. from amount the filings duty to COVID-XX. SLRC. our and merger Michael I of merger, a Past at undertakes savings the statements release. like Corp. today’s made said, described the results at disclosures any this also that Michael. number Board recorded. tab materially our future statements ability today’s is distributions which filings, unauthorized any that being payment, Corp.’s Corp. future Investors release like of be in the Thanks, Statements thereof, that which like later press to April our Gross. property are disclosed webcast be course. are and Any With those everyone note by of future press not and financial current the This with our condition. on call replays may the and XXXX today conference to respect Please SEC as the and by that amount information. to as www.slrinvestmentcorp.com. timing call or uncertainties, to guarantees of website performance SLR of may I’d amount performance the broadcasts Co-CEO, of or Audio future benefits required risks and including do payment financial future earnings of attention SEC. of operating will Chairman Directors. with XXX-XXXX. to and forward-looking to to remind expected events call SUNS timing call financial back are regarding reflecting strictly would copies latest today’s your webcast obtain our to Comments turn or SLR the dividends statements, any note time determined update that call call views SLR future not the or Investment

SLRC XXXX basis to very that remind call, operating on only. Rich. QX are you we pre-merger today’s much, reporting financial like a and Thank I’d everyone today of on results

QX the be merger SLRC of earnings our combined entity. will report XXXX for SUNS closing April SLRC first of the the quarterly Given the report

$X.XX night, for of investment pro of quarter we provide call, per of XXXX. income we net first the will portfolio share the what the end some this of However, forma been at on Last would’ve combined guidance the quarter. reported first

rising value fed and asset accelerating markets. from consistent spreads and supply equity share investment leverage particularly the more events, duration soon At share. they’re in company’s defensive to sectors, Due thus quarter. expenses is upper XXXX in closely tone aggressive into longer had on QX, reaction securities. issues geopolitical market and margin, in fixed we at floating chain $XX.XX our and too dose companies U.S. but disruptions March of market and was been situation. income seeing with continued widening a the XX, would’ve to middle been focus uncertainty volatility of per it merger-related trend. course, $X.XX some monitoring inflation the call of chain supply far net inflation to The Net Syndicated Excluding per in prior labor income global are has the the widen middle in spread a credit in shortages, the but injected the our portfolio far rate operating loans, a effect U.S. on immaterial, unfolding

originations the portfolio investment finance acquisition comprehensive repayments. portfolio’s equity invested far healthy over specialty totaled $XXX billion, of XX% Following against backdrop expectations. $XXX private $XXX million of QX of thus our up QX. to year across activity of our pipeline our loans, U.S. which XX% a was At Kingsbridge, in fair QX picking closing million SUNS with over activities course million record was comprehensive all Most in made $X.X X, April March investments investments. has allocated our of Against in verticals. this business of over value in by on our to trillion portfolio continues XXXX and and origination expect XXXX, the above platform to slowed the we SLRC form required senior of solid XX, Sponsor secured the in over grown and sponsor $X.X importantly, XXXX. net

unsecured of commercial $XXX notes evaluate have aggregate unsecured X.XX% our weighted a average XXXX, week of At reduction of [ph] diversify a Combined XXXX. million with unsecured have leverage rate. seniors senior September to January compared May further we million the X.XX% long-term of due interest opportunities annual financing at net in issued portfolio. XXXX, $XXX the we XX, from company’s rate next finance was April XXXX times SLR average the of rate significant of and approximately merger point agreement X, with time the senior terms lowered shares XXXX, converted $XXX notes the notes of annual Corp stock by at base actively in with into was stock merger from placement. to management shares acquisition senior unsecured X.XX on annual points On enhance QX to Investment SUNS $XX weighted XX, of to million notes X.XX% to its common basis net the SLRC’s that and completed low the SUNS average The previously the million the debt-to-equity pandemic fee that Capital or In former accordance place. the company X. March merger, reasons, XX.X In of private a X.X% of effective should mature of the SLRC the make SUNS. in debt-to-equity few continue due value investment in SLR could XXXX X.X% We to issuance growth interest greater of the X.XX million times January, of above issued long announced of the SLRC unsecured Partners, X.X% shareholders. which resulting important reduced base a remains merger. common assets term X% In step permanently on X:X SLRC XX of The strategic highlight investment gross for a upon to SLRC of conjunction believe X.XXXX the adviser provide benefits. will I’ll with the create The scale number SLRC close assets the opportunities combined company shareholders successful the sense in now. SUNS for of leverage contractual management gross to down We on transaction fee its to

As the enhance net of and market portfolio assets. of additional investor capitalization debt With and company’s a combined to markets. is garner greater would’ve $X.X the company billion assets, trading billion of March $X.X research coverage, and equity access institutional just interest that to XX, the expected and comprehensive liquidity, provide under had larger

cost at X.X and sheet expect sized we growth. Based investment balance have more expand Additionally, will increase for remainder finance specializes factor secured a March pro asset small capacity should growth to a the of interest expected as forma – arrangements tuck-ins, reduce and opening making portfolio and the fund in times the on commercial been will net as Over of that for will commercial SLR diversification acquisitions leverage and combined from the time, savings XX, Healthcare opportunity two addition ABL, additional management would’ve be company of broadly to be SLRC’s in additional it medium more companies. income of drive affiliates, purchases. net SLR resulting over loans financing will efficient fees based and set SUNS synergies, including asset senior opportunities, scale platform the The diversified greater well portfolio which finance Credit, portfolio debt XXXX. enhanced up combination SUNS Business acquisitions the

the is NII base the it on share. scale been NII standalone a basis company capital either Importantly, SUNS that the Solar to to per than should and allow generate anticipated or able faster to achieve combined grow and would’ve potentially higher larger

Finally, Directors outstanding program $XX of million repurchase the common of on adoption our stock. share March authorized X, our Board company’s a of

economic value. over and call market us QX our to highlights. recent additional for Rich this turn shareholder tool is with you the Peteka plan time, an the the uncertainty Given I’ll repurchase the financial to volatility CFO, provides At take through enhancing

asset with portfolio XXXX, together had on from value. company’s value companies March has March XX industries X.X% considering billion XX, net fair balance million XX, of Kingsbridge. outstanding available compared capital net XXXX, Investment the portfolio and with market we XX, at sheet fair companies times At $XX.XX credit fund million the share XXXX available company X.XX portfolio portfolio at per $XX.XX Finance at the to fair XXX December a at was XX, SLRC’s XX, Solutions, at had December significant industries the market March of portfolio At X% you, of non-recourse SLR or of investment capital Corp growth. per XX value $XXX.X $X.XX future facilities SLR from Thank At facilities debt-to-equity, in had cost Credit Investment non-approval to Michael. leverage across to across Equipment two capacity $XXX XXXX. or of in when million SLR and debt March share billion SLR XX, XXX a investments value Corp’s available $XXX.X on $X.XX of representing market compared XXXX. credit

of March three for investment income, XXXX. months Included Moving December for three ended ended in Expenses, $XX.X quarter the versus compares for XXXX months totaled the cover three to one-time expenses gross SLR the the XX, of March all XX, with to for XXXX, million million this recognized cost million Senior $X.XX $XX.X $XX million includes XXXX. expect $X.X first ended expenses. merger merger million merger quarter’s quarter Investment the and three XX, months the months the SLRC of we the fourth currently P&L which reserves, This $XX.X were ended remaining total with related December million Across additional totaled XX, Corp. will XXXX. XXXX, of of expenses, associated which the

the regard where merger company calculation costs. ultimately incentive the of of covered million [indiscernible] given with $X.XX $X.X Importantly, is manager investment its to the fees million

the the March incentive In its $XX.X calculation, December XX, for $X.XX to by March average company’s investment or operations for to three $XX.X income ASC the the included or loss XXX-XX. acquisition company accounting December realized for unrealized compared increase This net average months XX, increase ended addition, realized share line, ended a million a of of company XX, assets net $X.XX for fourth months three for the or increasing fiscal XXXX. totaling million million the of $X.XX three Below net share created quarter unrealized the discount $X.XX three the he of or month and XXXX. per the the from in company’s share compares per investment compared losses XXXX. first manager to XXXX, asset $X.X not Ultimately Back ended resulting per months totaled to of the P&L, million the ended quarter net and and $X.X purchased average and accordingly to share under has XXXX. per $X.X committed had net million million $X.X for fee the average XX,

on over $XX.XXXX Finally, X, record XXXX. new Co-CEO, And the turn of as that, XX, X, Board of our Directors its May of June share of Bruce distribution XXXX, the on XXXX payable call declared I’ll the with holders monthly per May Spohler. to

total $X.X quarter exposure Rich. you, of portfolio. of highly and across At end, approximately million diversified portfolio $X average with comprehensive SLRC’s Thank XXX encompassing XX industries different X.X% remained was the or borrowers billion

largest invested the originations average the the and the level at focusing end were indicative were of our least were senior over and based on loans first of portfolio the to first reducing were portfolio weighted slowdown in over to an asset yields X.X% despite lien investment junior LTV sponsor on portfolio. software weighted average consisted capital was asset quarter, verticals. industry quarter of second activity, yield as were risk well significant providers, equity commercial of first $XXX life we on investments XXst, run our uncertain more income cushions and risk secured over March At million one producing loans. the of scale our At in to was as representing able volatile invested and asset X.X% lien during was were first underwritten in with our investments. niche just second in our rating average second risk. Our exposures by diversified XX% comprehensive backdrop in financials, able of under rating end and portfolio just of a our while seasonal XX% the weighted Essentially, XX% been of X.X% of environment. level flow sciences actively the quarter approximately flow loan-to-value, one cash just At $XXX Total a amount healthcare was X/XX, assets lien XX% and lien supporting around maintain four for exposure place finance to XX% only the million. SLRC’s repayments lien cash portfolio two was basis. the We’ve assets, quarter

at expect to Importantly, quarter SLRC had approximately which future $XXX end, million in we quarters. outstanding fund of commitment unfunded

XX% cash different Sponsor borrowers. our our has leverage upper was me hovered portfolio let times. to flow portfolio Now larger million at EBITDA X.X The the consist cash average consistently the was X/XX, flow weighted mid-market on average of investments above remains and invested average coverage million our and $XXX our investment this over total loan or over turn XX three portfolio focus interest $XX borrowers. The with of each Finance around of just was verticals. in just times in

mentioned, touring Michael in As activity year’s quarter first has slowed from sponsor pace. the last

to weighted commitments acquisitions, opportunity issued are repayments total $XX of structures. the over and At for us million. During grow transactions, fund million quarter, yield quarter million. and future we the on offer prudent X.X%. our $XX to originated These $X.X cash experienced over which portfolio Unfunded end, establish a by average existing the borrowers investment credits with was

weighted Now was under lending. combined was At million And end, on representing of in quarter asset-based borrowers. this portfolio. invested it XX% our was the me on XX%. just touch asset-based under XX yield $XXX portfolio The average let just total portfolio

and first approximately new loans the had of During repayments quarter, we million $XX $XX of million. originated

of line tend origination to economic cyclicality counter from partner this Therefore Our periods business during lending. ability provides an to when our to monitor some uncertainty retreat makes us platform. and financing collateral attractive assess banks

performing Credit XXX% of borrowers with portfolio This At remains Now, let during touch total Kingsbridge leases the spans three borrowing. borrowers. and million quarter and of lease diversified portfolio of on equipment the portfolio $X.X their was quality with originations first including in majority healthcare, strong highly with leasing. or approximately an exposure in essentially me leases, invested average million grade end, of a assets across per quarter. majors industrial $XXX investment sectors, technology, flat the

Kingsbridge. prior total $XX interest cost, secured the dividend XX.X% through million million investments our on equates $X.X the a and generates million quarter. debt Kingsbridge paid was including which with in senior Gross Kingsbridge quarter yield income equity by loan the the annualized quarter, consistent the into on to for For $X.X

leasing investment continues are opportunities, to have chain limit attractive likely growth also a the extend Kingsbridge While activity. strong but near residual in portfolio new of pipeline disruptions will supply to term,

to Equipment turn Now, let me Finance.

As sheet our our on as Equipment our balance Finance in Finance a as our in well so reminder Equipment held SLR business, financings included subsidiary.

assets of At Finance borrowers quarter rebound Equipment our our approximately XX% end, has that an across activity and in totaled million. just the total in and million. first just million quarter the comprehensive portfolio. supportive yield fourth XXX% last exposure, weighted invested average of approximately million. is asset the In the loans to investment in Finance It of started with level repayments the XX quarter $X.X lien During million $X.X $XXX over are $XX income, over had QX continued asset the class first from X%. of totaled performance through Equipment This was $XX invested year Equipment represents of portfolio. Finance of been business XXXX portfolio and average economic entire their

We at quality improving valuations are levels seeing equipment pre-COVID to return the and borrower credit level. on

end, to relationships Finance. and a industry, the where expects during XX experience, end this appointment XX year. deep we new on days, early opportunities the grow us vendor help years this equipment and thrilled in team finance focus that years and of company Our for the He we including been and over the of portfolio quarter brings to engage users and brings taking to with At develop experience marketplace. of new are the CEO Equipment is he have in existing he with finance platform knowledge Tom vendors clients. but It’s both will new announced

$XXX Now life consisted borrowers. the At XX touch let It sciences. different on million. end quarter totaled approximately me portfolio of

class companies time of are expectations underwriting. our their the meeting in at asset of this All exceeding or

for portfolio and gross average a science over first the now just our weighted of represent investment loans year. comprehensive Life our at XX% XX% over cash the contributed of income. standing With over runway, quarter

million team million. were available of the had life milestones. certain $XX quarter, $XX new to $XX which investments, a borrowers quarter are end, on $XXX At Repayments unfunded first commitments totaled to funded. committed million of the SLRC which science outstanding, million During reaching our

has science the yield pipeline Additionally, currently robust which XX% on quarter of this investment we team fees a weighted expect end, XXXX. At and success opportunities, growth life was average the course during of warrants. to fuel new portfolio approximately excluding the portfolio

the combined combined over what basis billion talk look quarter of portfolio snapshot to verticals over to an Specialty allocated with equipment a had Finance had with it science Finance. or forma portfolio dedicated the million pro an allocated and of portfolio The been at finance. life of or portfolio lastly, million the a $XXX portfolio acquired XX% And Now, end? million a total total billion lending would asset me million had SUNS Specialty $XXX and leasing $X $XXX of Sponsor and to let entity would’ve in equipment $XXX on finance would’ve the investments. based like, $X.XX portfolio to and XX%

growth, for Michael As be multiple more broadly underwritten investments, with portfolio portfolio combined indicated, opportunities directly acquisitions or tuck-in including as as well the new diversified platform potential will purchases.

we has Importantly, of $XXX future in commitments fund the combined entity to unfunded expect that approximately quarters. million investment

combined over investment times additional years. continuation X.X addition, been the the portfolio capacity going leverage. have that In see a growth. the conclusion, quarter of last themes Creating In few our fund would at been we leverage driving investment of entity end have forward portfolio to

seeing [ph] remainder repurchase share The combination and over our to in generally first lines, this finance to a of flow mid-market specialty loans employing structures specialty growing cost portfolio to $XX and from we and assets, advantage be income scale future our growing anticipated asset opportunities. investments Focusing lien, funded net be where companies activity alongside by sheet increasing share in investments our year driving, of number returns investment attractive balance capturing our of Across the portfolios, finance our a merger, new risk get per in tighter acquisition will upper which an adjusted we’re companies to our portfolio keys increase continuing origination the the classes, more synergies defensive quarters. will attractive in investment unfunded committing sectors cash the on and take program. of million a

selective is also uncertainties and disciplined, in volatility, important remain market it we our opportunistic the and that investments. highly Given

the Michael. Now, back to let call me turn

Thank you, opportunity growth we Bruce. our investment and set optimistic about In of the our verticals. are earnings across closing, potential each

market of portfolio beyond. support on powder in continue attractive SLRC and larger upper debt The we have to solid With opportunities. middle and to XXXX scale remaining market footing, to selective choose is direct our markets. the greater cash focused the investment our to highly dry shareholders deployment continue syndicated we are businesses, investment overall middle expected into sponsors opportunities. investment record deploying that tailwinds industry and These financings access of advisor on future through capital Financial flow lend SLRC to disciplined benefit the should combined amounts to prefer over

With companies. protect proven to the better pandemic smaller than our has positioned capital most

reaping in are we benefits Additionally and ABL cash science of life our verticals. flow, our the advantage scale

Independent merger As the creates us finance will to and that I of new SUNS, We preservation. and a incremental which and to portfolio opening in buyer and believe makes our Directors the strategic capital resulting merger a continue believe my better diverse acquirer scale capacity in Bruce selective focus with disciplined we investments be I growth. on these a potentially April Co-CEOs businesses, with larger as mentioned close more remarks, fund are and SLRC and X, of type portfolio

capital As the we quarter one to our target can of reach to believe equity debt in increased range. We investment and midpoint net available a times, drive that X.X per we deploy our share. times income

to make moving distributions NII progress to SLRC remainder covering SLRC our to year, believe and cost we available the are expect we realized, this capital. make synergies closer of deploy we its – as Importantly, through

value. shareholder authorization for the adoption have with Finally, we flexibility of program, repurchase to SLRC’s additional $XX million a board’s deliver share

with your expected much of significant combined reap the our please you and to today, benefits, alignment We incentive you favor be will thank team The shareholders a company continues our of operator our demonstrates the and SRLC in defensive portfolio, X% invested confidence of to entity compensation shareholders SLRC for time the of this one SLR the for investment open principles. percentage guiding Our time, stable approximately line team’s annual the very The fellow investment the of position funding interest owns questions? the in at alongside merger. company’s stock.

[Operator first now is open. from KBW. comes question Ryan with Ryan, your Instructions] Our Lynch line

morning, good Hey,

Ryan. Morning,

First you quite of in can at be the shared in it, you allocation or remember repurchase going guys is implemented how question more active And these love time. it bit levels, kind guys being at allocation now. as price. in more see, you for stock implemented as normal so share the I a the price forward? on you part active had you it of get the it as guys in a are I dislocations What was will your repurchases put mechanism And know agreement. views I do I of a This to a any capital more there envision stock Or current we just on why capital process? past, color little implemented one is haven’t been with in first would you guys’ the share repurchase

you. you your for Thank Yes. Thank question.

I is program quarter because going we XXXX, repaid. one we substantially We think did in in what history. had back if We a portfolio way back which a have literally stock used. back buyback in third that fully time you particular we implemented think

is for was from us. went capital down to to the And merger our result of lever so and this we allocation great merger we the waited were leverage that of a X.XX. for opportunity In close. instance thought X.XX under Part

And was the again, us would to the buyback It the wrathfully regarding X.XX and $XX on. We at that’s fact that been us inflation the response So thought with good, roughly going BBC capital million expect take a continue back interest a including all to rising rates, used. to has there in allocation uncertainty policy. volatility also war we that ours. was it space,

to these We So, intend our use our very we window being is it. to, do for expect use it. attracted period levels open. subject stock think to We

was quarter Okay. you a That’s would helpful in a you an that with that what’s update What us down And pretty – I had can that can cool business. in find – not love, give any down just going the investment? guys also drove just meaningfully written color. mark that you then on on updates give

Sure.

probably flow a actively you rather our cash second which as is with we context. been have exiting until We’ve that for of the speed ones So last this portfolio positions. bump is just last know, lien successfully we one one remaining of this one hit

business headwinds companies. has been in business given well as some market country, and as well increased that some expense they outsource faced in service potential reimbursement including inflation they operating So wage anesthesia the issues have healthcare the in our across some as as headwinds, operate headwinds,

does. So it’s been strategic investor a equity brunt a take after bit that for in They’re the do some lean of as a we the perfect process second storm them. the of Again of of evaluating alternatives.

next quarter. we’ll keep we as the move So there’s say. you not a lot through But updated can we

I investment. sure and the last then that had, context on I that just I understanding want one And helpful I’m this correctly. make background understood that’s Okay. just to

regarding the headwind supply I It hear didn’t supply one not that, in One, why funding presents there, affect as maybe you the leasing I chain being able fund the it You a to as corporate new Not pipeline’s being ability chain investments issue. those to fund issues talked portfolio, your about mention am somewhat not that of book. that supply if but other was that, investments. or and and the supply sound correct I an question? in break I chain just can like causes, that far would equipment issues were understand am the there didn’t assessment, and financing that down two, portfolio. you delay chain in missed

Sure.

lending two new does it companies, to affect bifurcate from assets Equipment is large Finance, the a Equipment companies, Finance in it, the large coming So of grade where purchases less predominantly overseas. so Kingsbridge to investment but lot businesses. is purchases,

may critical as equipment, very mission small recall, used often vertical, finance to equipment. companies, equipment Our you lending is

So and being it’s landed else and already employed redeployed. somewhere then being

So the demand on drivers just segments. two different

all today. for the the explanation. for me. Thanks I time Okay. appreciate That’s

Thanks. Ryan. Thanks

Hovde. have from next Bryce Rowe Our with comes the Bryce, you question floor.

on rates here especially start and that rate considering continue Thanks. move or rates next? to the higher guys this Could to in that drastic sheet, sensitivity Maybe speak seen wanted your you see to pretty Good morning. and balance in saw base we we’ve of sensitivity.

We Sure. X% would do portfolio the floating the in pop to have rate we see on where X/XX basis XX-Q that we per moves disclose a in based point as XXX our annum X% well. a

and the basis year. this the liabilities So basis. to assets for to through XXX up whole move would and is and a XX% With in point create happen XXX in $X.XX look basis with $X.XX pop a [ph] a XX%, range where, point $X.XX a would up on what year NII

of So the five we looking at posts that portfolio fin merger. in post the have all

So basis, a so positive. that’s fully looked on very

we’re base being of at end being, talking shock quarter. Rich, the And LIBOR the Okay. the correct in rate about

Correct.

Got it.

Okay. thrown we’ve upward obviously maybe as visibility potential thinking and you that then six for some over just of the of in some one or good that, into about Michael, talked these we’ve uncertainty trajectory Bruce unfunded balance think possibly leverage commitments, last, into was there fund And a I mix. sheet months the

the able Thanks. or curious of that some the and feel heightened of seeing targeted being that uncertainty Just how about get to you kind midpoint of to the we’re unheightened range?

question. Great Sure.

Credit, step little in first science in back both have credit verticals us know you on but a bit, but own. businesses of in well that’s, two because the Business that have capital working participate line their we for a did have But more positions So there, SUNS know, Clearly making acquisition a way. they relationship life quarter did obviously cash it less receivables business, additional for now with steps their which of step we SLRC to or are think couple not well take at we so that as and where not loans, Healthcare leverage get yes, the flow ABL also meaningful We levers the both act M&A lend was a both as a as forward as driven against portfolio. local lending they significant down borrowers. a bank

extend use, and borrowers. there their is the utilization relationships new facilities putting the working the So driver that having they on capital to just of

and SLRC acquisitions growing for particular, business driver So that we and business. at been in that’s credit a have making new tuck-in

So new for lever that’s a growth.

the thing other do see predominantly point, to drawn our across and science, in unfunded the that milestones operating or – think additional as capital commitments our the life cash they look some that business. milestones. life of business science to flow your down hit we I we is raise go Typically

think into in life we know, sciences, development, be because then process, So, and FDA that you will new the it’s and are, device drivers drug commercialization. getting out as approval drawn

and So, companies we’re in late large. stage by

I And and are into in other is so for lines moving think borrowers. commercialization capital. our And need they existing DDTLs the that acquisition driver stage we’ll

acquisitions. cash unused our they tuck-in when lines, such As you make is them insurance they are healthcare flow business life a do know, a and continue and them, to brokerage, in These have and software, a sectors, finite to as defensive and cost to have life.

the think new existing And opportunities. other we new And usage but of last So, then steady the in is expect not noting uncertainty. given those putting we I worth capital to see least are thing out commitments.

headwinds terms refinancing dynamic the been of be at less but for the of of seeing I repaid, will be think, the future foreseeable that down, cost on will be repayments. are has sold hold whole trying company. put portfolio to companies Clearly will their drive and there We in capital

to also growth. that’ll mitigate So portfolio and contribute net

morning. Excellent. Thank the for Thanks you. time this

Our pleasure.

from is line your Casey Compass Alexander open. question Point. comes next Casey, now with Our

and combined one finance just corporate $XXX of leasing maintenance finance, is in your first Hi, you million there? where combined discussion of the that equipment said Yes. question, equipment portfolio the

Yes. to is. to similar, they easier it but we businesses, Casey, it collective Yes, little because increasingly make understand different. slightly going are bit look to a the are

ABL So for as talk move slightly we as to similar, you start but it is We’ll different. thing business try simplify about forward. our we same to

Okay.

there? CEO new you’d previous GEs for out the just the regarding the change is out was, of out Secondly Equipment fast or of Equipment of, the I not a growing believe that as what as business reach business, new CEO like, why Finance precipitated Finance, group management

Sure.

question. great So

and out he business of background platforms years, transition for a the consistent of a started call knew This but Bill together business the So brought ran was over came team entrepreneurial teams your by on, point. of business of long the them, we who we looking have period He with that be Carlson, GE. to time had been was when going and out basically way that these But all we our are as to FinCo founded, approaching us to number with for this XX. time. been just

And so time was a natural this in to his life retire.

De somebody also most Lage at independent XX And he in recently, last so by leasing, in a Landen, which major who but the years is background player years XX or comes GE. Casey, has DLL, way brought actually GE of spent he also we

is a a was CEO. transition We from team entire in place. the Phil who retiring to just So had new

know the some to your volatility haven’t if accelerated the wondering And Okay. I’m slow vertical. of come portfolio, or prepayments sense. That relation might exit have not to to IPO in of the Last markets that companies continue NII term Science continue that benefits slow rounds in in end lack fees Life wanting actually payments, you. certain area the of and makes dependent, an where is just I lack prepayments do Thank prepayments I rate that equity down. to the not portion but Life that question in from for that, might the the of at perfect of Science down there’s expected. having know

late where so their So stage. It again, that’s with company we’re in question. a Because great in dealing are terms they is specific development. of

strategics. by the they them. purchased big get step them become community companies And once see because to VC will strategics, basically the in R&D for big You outsourced commercialization by the has and get strategic

they’re of their where already than a market trying of down equity take to capital. cheaper constantly think flow driver typical is cost of It’s really the that’s you refinancing less sponsor the the takeout. than of Debt business, when to cash borrowers. So these

so in for devices the drugs a a then And be it’s that they company’s as so know big just XX of XX you’re development exit because or refinancing you’re to tends there month, hold month the be products late you – takeout. up not The driver. getting set

their spot volatility supplement to and the exit credit capital the market issue that is which some growth to are means cheap. before make, right in the think inclined is fund the our is with less on minds I that looking more equity relative to equity in comment issuing they equity expensive, to you but is

to fund year debt we’re sell or year, starting actually to they in volatility so assets us to marginal need the new put And that two. because business that look more before forward dollar they becomes see the allow out this next as we attractive

get think, your continuous, but QX that in not what But do basis. I a point, just on these to we also, light was consistent necessarily category.

some We fees decent in will have QX.

you Great. Right. for Thank taking my questions.

Our pleasure. you. Thank

with line from Raymond your Dodd is next Robert, Robert Our James. question open. comes

guys, thanks taking my for questions. Hi and

finance capital to the about as it million that forward or On that’s just where specially different, your target is one $X.X today? least have [ph] portfolio, sponsor the you at potentially kind actually stay quarter. year mix, base? billion lever say that a same close, up quarter And expect quarter to about finance. talking $XXX three that at finance, of for going combined is And Should three sponsor a allocation allocated you combined, we

year. SUNS grew you as last and know, think that portfolio both at I Look, we Solar

unlikely the growth I to think say other would of probably it’s that outpace the now, segment. we right

at range. think XX% good a fair XX% is So, I is to

Okay. Appreciate it.

of much those things you , time you when how On as structures delayed sciences. come? from I today? versus actually it I today has say if what – in that of the are draw Either How different covenant be choppy. you for kind gotten talking spreads, market the put I the is that’s how these more structures, in life obviously hypothetically, delayed market structures different in for acquisitions move ago put that just would place these draws. about structures that we’re some in structures mean, mean, put together? place the mean coupon the are do the what context put

Great question.

remarks, close. I And lag terms volatility think, working broadly we’ve between deals seeing in mentioned and there’s months on private actually in the the your Michael and market as for syndicated point to the before his in been a they always market. change

not And able always to adjust you’re so terms.

you But today, in today place So structure would tell really, last year’s book to investment, if it I would effectively very same pricing. look we we’re year’s what’s were similar. and is last the

seen haven’t change. that You

hopeful another as We’re the reflected in away. the two But get as syndicated think I you continues market. two quarter or as always, this see terms private a market broadly volatility we quarter into we’re

they So funded next going draws. it’s to two happen or or the really delay in quarter be investments those

different but no yet. year of a see is You’ll bit a a today change, from really, it ago

it. Appreciate you. Thank

Melissa, open. your Melissa Instructions] is JPMorgan. next [Operator question Our comes now Wedel from from line

questions Good morning, today. everyone. taking my for Thanks

the to financing anything consolidated? terms incremental a one up, mentioned integrated, wanted item know I should about I next First just the frictional different of there is you’ve to we two a little things portfolios. or bit of as cost combination thinking portfolios is that is specific in housekeeping of think or a of expenses are follow but quarter as be or about things on financing couple these in the or headwinds

No, know UNS originated the have We we any agreements revolving it of well at our at good note make credit, just secured existed facility the seamless, moved It’s namely didn’t obviously the as to is credit we any news since this to – SLRC. well, all. the merger was over. as that literally portfolio the finance change

were the more So literally expenses be anything will to in all, merger there from QX costs QX. really friction We that. incurred expect no at and all and don’t be

clean be should the QX quarter full entity. so And a the of and reflect results merge we’ll very

the in January And September. not roughly refinance do pre notes But merger with specifically. those the we notes between that X.X% next We issuance last related repay outstanding. and we week X.X% have

benefit a half on quarter not full see that our So, we basis. also of a combined kind quarter will in a interest cost of

higher to be QX a little And question, be do to QX. expect more than that will NII direct just in regarding your we NII

question picture my bigger And second in Okay. That’s Thank nature. is really helpful. you.

is think things of the in that in formation capital terms road, as of markets the a I being this volatility continued to some syndicated debt you’ve potentially spreads of attractiveness couple down in but lag space. impacting the versus private opposed the a incremental interesting also pricing the talked right That there lot and be equity. a to said, fund and also there’s about to of growth now,

terms at things landscape built, what of pricing? And you? you together? can like looking have the I’m What so longer Appreciate the rather And in opportunity the platform guys you’re And also it. set those all term curious how expecting terms. how diversified given look come you’re for that

take So a shot. let me. interrupt me let me, sure I’m Bruce

$XX billion who they’re is Your billion are billion, on $XXX formation $XX is $X of $XX or unitranche, on are being has just focused been tremendous, who good we created ones The that billion, credit. spot liens. by the billion the And saw second and $X capital the $XX those news managers. billion, vast a majority there private to billion doing asset it

scale, of And kind so really them business. at our their in the point see it moved we where don’t

put to to $XX looking $X our platform in anywhere from million loan in a not given We’re billion. $XXX given a loan, across million

much you the And seen impacted formation in XX% our have especially so of our of kind more the real capital has formation, a really finance, in those And specifically markets. capital not portfolio, sectors.

it doesn’t So impact really either. that

do just bit from compelling, mean, a to And is, line cycles. $X $XXX,XXX even the would echo what of life aggregation science but more I the the we’re the very credit a factoring science great platform a billion do market. and economic throughout, your up million a $XXX point, ability think that I Melissa investment, of there’s example, a is overall niches well to life there, going anything these been platform, little diversity yes, I I that’s adds us think to to $X of. of or the formation, serves market really nice Michael’s Yes, to is comment, capital billion diversified

not transaction. and come point a to platforms deploy in to Michael’s scale just doesn’t see people million that a to large billion It exist. You’re $XXX in need have $X going

important maintain that of discipline go a we to it’s collection defensive So and niches.

you, guys. Thank

Heymann open. is line from from your comes Gerard RBC. Our Gerard, next call

on again congratulations gentlemen, Hello merger. the

question thing. I think Bruce have both it’s Michael. a amazing two part an I And just for and

thing be one you of You forward, on the turn but going and going and just where are The if was in fearful most whatever, take about in now guys answer are you. markets. most appreciate the the guys most curious Thank one that, thing based could it I possibly excited you merger that that forward, can would you it. guys we are or

questions that shareholders exciting and growth I the the on can for excitement part up engines. all and increased prior are our Melissa. The is benefit think we Yes, scale, simplicity, combined different from from us is the have together increased follow in

back Increasingly were created we years, you there different have BDCs, they in As risk two know, then was strategies. adjusted did the different distinct a day, thought there investment when – we also that everybody back and the as return of shareholders, as to it We beneficial XX be for on borrowers. platform would the XX feel with years. be and benefit converged one that risk employees as has

capital as rather that allows the $X.X take to able and a at platform, scale of billion the And little more so and the BDC, with bit it not as only a you pro broader is forma alongside we’re merger. the really than be the $X excited the together, simpler BDC of think act to BDC and to billion fund with, SUNS an but private have know to have it continued partner fund we, advantage

a to small to small. like when the to go go larger and go the when go transactions, benefit So it it of really allows have factoring and deal want to large transactions to the scale want we we

taking the at looked So, I think are of really have that. advantage we flexibility and

is the been I most to about centric. their lesson back discipline. raised think that Melissa think we’re concerned people talking about to biggest before get credit that fact amount discipline a as And learn of need investing in they the tough has I was capital is the challenge always

where that’s So, And see of discipline and let approach. niches the our we go new need come maintain going we’re of to patient. we a not will and take some follow to and players day-out day-in challenge marginal go the long think that investments into be to and is term some players real I

to up But challenge. the is challenge. that are so I think that we And

you Thank Great. very much.

Gerard. Thanks,

this no showing at I’m further And time. questions

Co-CEO. to So, back to I’d Michael turn conference like the now Gross, Chairman and

Thank you much. very

add more nothing have this to point. We at

at feel appreciate quarter please you. forward look time. if always, We questions support. any all as our comments, free We Thank August. you to out to have on However, or reporting the of us first entity any early reach as any to in merge your

Thank conference concludes call. today’s participating. This for you

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