SLR Investment (SLRC) 1 Mar 232022 Q4 Earnings call transcript

Good day, everyone, and welcome to today's Fourth Quarter 2022 SLR Investment Corp. Earnings Call. [Operator Instructions].

It is now my pleasure to turn today's program over to Michael Gross, Chairman and Co-CEO. Sir, please begin.

and much, very you good morning. Thank SLR year ended to Investment Corp.'s fiscal the for call December earnings Welcome XX, XXXX. I'm Officer. Spohler, our joined our Co-CEO; and Bruce today Rich Chief Financial by Peteka,

start Rich, begin, forward-looking before the would please statements? we webcast by you and covering

Michael. being is property Investors to website www.slrinvestmentcorp.com. call remind I call prohibited. unauthorized Corp that of our and the SLR today's everyone the release. that note broadcast like recorded. form any being Audio Investment later are Please from this earnings This calendar in available would in webcast are in section event of there Thanks, as that made of at call Sure. disclosed will webcast press today, our is strictly be replays any a and

financial call would future of risks constitute attention information. forward-looking and financial relate which made condition like I number and customary press a our disclosures to performance, future release webcast involve to to statements, are or call or your conference regarding future also our events results performance in and guarantees may condition. in our statements this Statements or of not forward-looking uncertainties. the These

so by visit obtain call duty no please undertakes at or To to update to any actual is SLR including a results law. Corp. As future filings result us SEC. the do unless of Investor time our with described differ of not to a SEC website performance from number statements, materially our forward-looking copies our as indicative those filings, may latest factors, XXX-XXX-XXXX. results, of of time in required

the Co-CEO, Chairman Michael that said, and turn call to back our I and With like would Gross. to

and and much, for very you thank you good joining again, us. Rich, Thank morning

realization for and income of per investment the that able the report earned we distributions. rates synergies, time investment net reach had of which net fourth portfolio income projected at SUNS. SLRC we rising Due the to credit share, fully $X.XX to this our of growth, target the to quarter portfolio and of covered XXXX, faster are quality, stable of SLRC were than interest merger We

to our lows, we growth income during COVID-XX Additionally, per XXXX. expect portfolio grow from share we investment net as continue in further its

net cash Enhanced At XX, and asset-based share of September by $XX.XX and in per acquisition our Overall, portfolio XXXX, is well, quality compared flow asset our was noncyclical in SLRC's value is December is at industries loans $XX.XX portfolio stable. very credit SUNS, diversified XX. performing across well our loans. to

investment the loans, lien comprehensive was defined rate with loans, senior our At second is loans. lien lien and invested second X.X% loans second first is is X% cash portfolio, lien allocated flow floating December asset-based our in XX.X% comprised of basis. to XX, only secured in portfolio Of of borrowing X.X% invested of which

stress recent quality. a our of we in test on are Based portfolio, confident comprehensive its credit

on better exposure. interest Our lien equity investments that loans lien in environment withstand has loans rate resulted portfolio than with first or continued higher equipped second longstanding portfolios to a a is

borrowing basis a Additionally, the positioned and covenant were which portfolio full supporting economic finance volatile structures, of with a comprehensive lien in our specialty first environment. invested XX% assets, loans for

current attractive several The most in years. for the new seen are conditions we've market investments

and, become had Terms importantly, which environment. finance on For of companies. repayments available $XXX specialty finance our business, opportunity attractive, the set investments inclusive take during of to folio sponsored flourish conditions, market also turbulent seeing finance million new more an of QX, originated this have and capital typically have $XXX company advantage commercial attractive and of investment are million, loans

million and who've this to volatility been through over power expect more a SLR the market, $XXX fourth The ESL greater strong such borrowers, sidelines more of even by positive portfolio lending the All pricing have continue valued throughout our X of on quarter, platform as influence of the strategies year. lenders we growth a terms. banks hold had are the investments and

During of $X.X capital alongside anticipated capital of second of vessel our inclusive the half billion of which aggregate incremental SLRC, BDCs advantage. secured competitive the This Capital an last already leverage. This us additional comes SLR additional investment will investment year, from benefit adviser, full at invest will when at time a many additional distinct a capital giving other scale. sourcing are capacity, Partners,

leverage on on of period of competition, structured via companies existing portfolio the perform continues deploying we extremely in specializes with dry reduced their loans the resilient opportunities government and a sectors seeing less in COVID-related stimulus. financial result yields investment are accretive SLR more which As to well, powder add-on of acquisitions. recession with recent focused higher The sponsors into

times, During capital uncertain turn supporting to greater our working increasingly believe and lending asset-based strategy investors borrowers management. liquidity We across economic the economic our cycles. protection provide with and for collateral loans downside structure

conditions constrained, flexibility of traditional a is access capital when sources have our to strategies we advantage these allocate ABL of take outperformed market challenging attractive to attributes. risk have reward and Our company's lending more historically to businesses their the to during

We investment have a opportunities, more ago. to we ample are available dry than favorable powder terms year that believe us which to are were capitalize on

billion weather at $X.X funding rate of senior of half strong environment, funded rising annual Our our of notes X.X%. interest comprised in rate average a is to weighted profile of a rate fixed debt just a unsecured position with

SLRC's our of range At of the X.Xx X.XXx debt from within equity, leverage to target leverage low X.X our was COVID-XX X.XXx. up December XX, pandemic during net comfortably and to

not debt near We're until January, the our On the specialty including and term of fortunate December current limits. of in available position million in of needing $XX base repayment of higher any credit our XXXX. notes of to capital companies our is term the borrowing end term unsecured our refinance facility senior maturity in next to at subject rates. portfolio XX, at the debt finance

environment. current investment $XXX SLRC had attractive take available of to in advantage million over capital the

our the remains pandemic, during reminder, credit a strong. quality As

of earnings debt their paid down as from However, with loan power borrowers government the did capital programs. lose we through stimulus many repayments, outside

This both should specialty to cash for grow our very to drive loans, and our further attractive which year, we expect vintage in earnings. increases expect where we flow to a continue portfolio, be finance

In for of lending originated cash commitments of senior QX. of million. December, first to December continued first SLRC SSLP contribute we investment loans recently our SSLP sufficient At SSLP. loans. program the loans lower-yielding to additional $XX announced made flow SUNS SLR lien lien held by We've and during equity began contributing portions have to our million partner strategic $XX XX,

million. target The size this of ramped is $XXX once portfolio

capacity expanding SSLP for us portfolio power. and full our earnings Importantly, provides

to program, million of at to shares average approximately in $X our $XX.XX. shares accretive levels we utilize repurchase intend this quarter shareholders. are We resulting in end at During the purchased fourth to that to quarter, at we an were active of repurchase program continue share price

you I'll to financial now turn the fourth highlights. Rich CFO, over take through call quarter Peteka, to our

in across net market share SLR $X.X portfolio XXXX. sheet Thank on-balance across XX, value investment portfolio or value billion fair XXXX. compared XX, a Michael. XXXX, XX value companies a was September at industries At share had or portfolio Corp.'s in XX Investment to billion of $X.XX you, December asset $XX.XX December billion of XXX companies $X up approximately XX, $X.X XXX at market to industries per fair September billion SLRC's XX, per at compared $XX.XX XXXX,

with By leverage the At and had target future growth, comprehensive of range company while debt of its X.XXx debt debt Investment approximately combined equity. net capital available the company's to portfolio X.XXx available capital to leverage significant the together subsidiaries, available outstanding remaining $X.X billion considering capacity has to net credit within with Corp. of company December facilities, significant SLR the to XX, equity. fund X.X from

Moving to the P&L.

versus months the X months to Net million for $XX.X XX, This expenses ended XXXX, months XX, December for December $XX.X X investment XX, For the income months September XX, X the $XX.X XXXX. for ended XXXX. million totaled compares totaled September ended X million gross ended the $XX.X million XXXX.

Accordingly, months average $XX.X XX, average ended $XX.X investment or ended months for compared $X.XX per September the million or X share XXXX. company's $X.XX XX, per share net for totaled million income to the X XXXX, December the

million the the third line, had XXXX. $X.X and million the of company quarter the losses fiscal Below loss realized unrealized totaling realized of quarter for versus unrealized for $X.X net fourth and

a compares share to This net of and for $XX increase or assets increase share net XX, from net XXXX. per for December September had operations $X.XX resulting $XX.X company months XXXX. average per ended a X million million average the the $X.XX Ultimately, ended of XX, X months or the

share a distribution of monthly Board $X.XXXXXX to per on XXXX has of record as Finally, stockholders April of of XXXX. March X, payable XX, declared the SLRC

that, I'll Officer, Executive to over with turn Co-Chief the Bruce Spohler. call our And

Thank you, Rich.

borrowers, of consisted of with year-end, At value loans providing exposure XXX senior comprehensive to overview over $X.X fair investment Let portfolio of approximately average combined me portfolio. by basis, XXX an across $X.X industries, begin approximately distinct million. on secured the a billion of an

quarter cash value, the lien portfolio At to base borrowing loans measured full asset-based in and SLRC, only loans, loans, of in XX.X% including end, at of SSLP governors. invested with flow the second first X.X% second fair senior loans, the remaining secured lien attributable XX.X% with consisted and investment in comprehensive lien X.X% with invested

for strategy specialty defensive upper that and investments and turbulence pending We senior the return us in with provides approximately mid-market differentiated portfolio, to cash extremely companies. finance XX% the flow positions sponsor-owned this diversification our comprehensive construction profile Our well remaining for loans account shareholders. invested investment of secured a XX% believe for portfolio

from our with under risk. weighted X average third scale, portfolio risk quarter. representing our end was our level least of the to rating average At based up yield XX.X% on year-end, of asset XX.X%, rating weighted the the At X was X amount investment of risk the X year-end, at

to strategies. Now our investment let me turn

segmented we X the As distinct a into classes. reminder, portfolio asset

The upper as mid-market equity-owned flow refer to loans we cash companies, which private sponsor to first is finance.

asset-based is second loans. The

is third, finance. drug to The capital companies, which the venture to back science device and made fourth and are loans equipment life late-stage

senior start services care mid-market I'll our in diversified provider financials. of segment, these with lien We X to finance. we on this loans being each investment verticals. noncyclical originated first upper with exposure and industry Now industries, touch sponsor companies largest secured In health

acquisitions, attractive to Finance to platforms when during in which add-on sponsors is and a from dry CLO time the issuance in lenders desire increasing in the banks direct preference work are it at segment financings, benefiting Our record new and environment. Sponsor available and valuations this have with to increasingly partner a slowdown from retrenchment sponsors management put powder and teams private market

reduction opportunity resulted us. an turmoil set in has bank's The for by to led has sharp syndication tightening a ongoing aggressive yields of caused bank a loan widening This willingness in like risk. increased lenders market syndicated Fed and market in assume direct to the

to XXX diminished of of seen the loans in in the capital XXX private credit to point to sell-off ago. available result increase the basis on relative we a markets, issued and a As supply yields year borrowers liquid have

Additionally, total decreased, for issuance profile lower investments. new into leverage which levels translates has on a risk our

for be pipeline vintage to this to sponsor XXXX year. our for a expect We finance build great to throughout and continue

the portfolio under just At or us, year-end, across finance million, our invested XX% of this companies. portfolio, secured was including SSLP and sponsor was attributable to senior XX total loans $XXX in our

The end of the at cash third $XXX average up flow million million was portfolio at EBITDA quarter. our of year-end the from $XXX

weighted the million of our loans the repayments was originated flow our weighted X.Xx. in quarter, cash X.X% portfolio XX% approximately coverage and a from amortizations During quarter, loan lien The fourth million. on portfolio first we in above $XXX $XX and invested XX.X%, of cash ratio up average with prior flow interest and yield experienced

any be our interest facing borrowers payments. believe are from We withstand positioned pressures investments rising to well that may

backed segment. liquid rich, let Borrowers periods Now me which during contraction. outperformed pressured market has ABL to asset by ABL but our rates are to Historically, of their turn and liquid raise by volatility collateral. -- their have demand slowing our forced flows cash and capital are economic business rising by

of XX-plus team's gives of borrowers. that against backed Our expertise by this average the deals in in collateral us years the strict valuing collateral are advantage underwriting bases an deep borrowing

consumer year. our this which demand heightened capital for into volume ABL translating This increased particular, to segment seeing slowing is towards retail companies. believe business, deal extensive a positive asset-rich loans spending we experience will continue is that In currently has throughout providing business working capital,

loan portfolio total At representing year level over borrowers. was of Average in XX.X% of XX% in It XXX quarter. asset XX.X%, invested was our yield the senior secured the asset-based billion, ABL portfolio end, third from $X totaled up portfolio. the

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

let Finance. turn Now to me Equipment

Our Equipment with customized needs. Finance leasing North in businesses capital provides segment equipment solutions America equipment significant

investment-grade large held businesses to Our borrowers range privately middle from companies. market family-owned

warehousing, including manufacturing, spectrum Our leasing information a of transportation, capabilities technology care. broad health span industries, and

quick valuing The provide structuring which in customers during volatility. allowing to are portfolio the our expecting needs, this with This team to grew of especially periods is their trend has market year. that us during experience financing we solutions and extensive quarter, valued to assets segment's and creative fixed continue loans, fourth

approximately the At year-end, level was XXX it portfolio $XXX was million, the weighted XX% portfolio, average totaled equipment of borrowers. and our representing yield of finance portfolio The asset invested total XX.X%. across

During loans and equipment the of million. had finance of originated fourth we quarter, repayments $XXX

provide me let of Science Finally, an Life our segment. overview

senior reinforces For secured Life interest medical for by has volatility need the in ultimately, new activity current the type for drugs the additional and in loans Sciences, venture not need and capital has devices. of the and offer. we uncertainty recent market ultimate been economic lien and, that This impacted years first bolstered

this capital valuations improved coupled venture opportunity with drive set. of amounts are to continuing Record

the continue. trend expect yields We higher of recent to

low Additionally, XX%, for than which are downside loan to provide investments. values, protection the less typically significant extremely our

in that XX We have portfolio million over important standards. year-end, portfolio in remain cash totaled this segment. of invested is Over XX% Life months across borrowers. to Science to continue metric $XXX disciplined At an runway, borrowers underwriting our of our loans in XX this

and represented gross quarter. contributed for XX% Science Life income portfolio loans approximately of fourth our of the XX% investment our

loans milestones. the of drawn hitting $XX quarter, Life million. repayments which be originated of $XXX on team exist, may unfunded of commitments million At based and $XXX During Science new certain the borrowers year-end, million had

which robust was we weighted Additionally, the portfolio the on quarters. fuel to average pipeline opportunities, new currently year-end, team this has growth next a several expect portfolio Life of the over At Science yield XX.X%.

However, excludes typically and fees take higher. success that which warrants, our returns

vintage performance the X the In each be conclusion, what of the strategies additional growth portfolio will anticipate for an of well our and as about within our we each year we optimistic for this attractive of prospects loans are segments. as investment

this let Michael. At me back to time, turn the call

to our In approach, loans coverage portfolio any time-tested well significant constructive we closing, loans a first comprised and that in industries cash resulting noncyclical volatility. borrowers believe Bruce. lien for continued with asset-based you, us defensively a Thank position recession conservative of and market both in collateral flow underwriting

strong investment All increases board quality of investment across X asset classes per our growth XXXX, drive share. We're further overall in attractive are our the should and portfolio further in exhibiting net income anticipating pipelines. which

fully based our our continue power in on quarter mentioned I As fourth this remarks, year first we expect our capital my quarter opening pipelines, deploy current we And XXXX income to net [indiscernible] into higher-yielding distributions. investment covered available assets. earnings to build as our

amount please the the amount and or a determined are and of However, or of of guarantee the by Directors. company's that the dividends future note not amount dividends which distributions timing past thereof, timing of distributions any Board be payment and

for be invested team in significant SLRC Our investment percentage with the SLR buyer's stock. a company's incentive one annual alignment stock, of company's to including The shareholders principles. our interest owns X% continues of the guiding approximately having of compensation

in our company's funding shareholders defensive stable The invest alongside demonstrates SLRC in the positions. confidence and fellow portfolio, favorable teams

for We time line you your open please thank for the questions? will Operator, you today.

Alexander question [Operator from come Instructions]. And first with Compass our will Point. Casey

of questions around your loans fixed My one But moved yields in recall, of used which as past the the rate, are other it's finance, on to some I attractive most are of have shorter-term the it. equipment centered kind portfolio. verticals be that on because yields

the of that relative I'm yield of turn weighted kind And take XX.X%? now yields it onboarding kind so you And getting wondering, of long are average what does to over? portfolio for how to

thanks. Casey, Great question.

know, portfolio. you is churn So a as yes, it high

the XXX repays and Equipment of at year, originations of Finance X.XX%. you As had look

to loans. fixed high are a rate is churn. burdened we But So your point, it

can't So we by what above XX.X%, new put segment time, segments. deploying assets wouldn't putting other precise yes, we capital be else but, I on are a definition that seeing in we're that or given to

So we catch next the expect to it to months. XX over up XX

sort backed simply portfolio universe. equipment just your are to one Okay. financing machines? mining of it's by loans become because crypto -- include equipment any other question, to the relevant Does And financing that

but Great no. question, No.

Zwick Hovde from come Our next with Group. will question Erik

say cost some and of wanted I current just all gave the within of forward One to distinct is helpful. characteristics the that kind down asset breaking commentary Bruce the appreciate

And is those. I'm X the today, guess X pipeline I curious, at visibility sectors, But the it the the as look that, about quarters, sounds probably curious, relative just X at of good to not and you attractiveness think growing maybe next positive that of you're as I'm the like sure and all X look beyond clear. as on quite you

based more X first in there here, be the relatively is part to attractive maybe look would exit X year? the X the or expect you just or originations that that of on mix portfolio, stronger But -- the

Yes.

If 'XX think year And proxy, we expect $X.X ABL we I the as was $XXX that sort originate other the I think for a million year. continue segments. that the of at look can you out to of just would last billion originated

[indiscernible], Equipment general, -- As be think Finance broadly repayments. more active but is we of I this on ABL steady just But environment. of ABL going addition steady more with of in is kind drip touched a drip Equipment in to to in a Finance,

in to defensive health steady market is still But Science care, extremely our as because, in Finance I in industries, be our think environment, ABL certain comments, little resilient. Life and which We're borrowers in a will this Sponsor as only and bit cash segments. certain seeing heavier recession we originations open mentioned flow is such

And businesses, to cash so is or in only market capital-intensive the since if capital your really assets your flow access using businesses you are cyclical dislocation. in is

a out what year, we attractive. the that see activity driving will very in but other else find segments, ABL is heavier. everything We So steady which be this

across more other, are and is periods segments see what And with economic to of attractive Casey's earlier, consistent see very periods. comments all and you yields the you each benign

another And high higher. throughout share on for the got portfolio growth helpful. and That's with higher a leverage assume room expectation outlook there just take to the I XXXX, you further per rates. then growth. of expecting about that is have part certainly, also in you just there's some opportunity And for question comments a mentioned that

increases, you take expecting likely of kind weigh you're well. what those the of higher of of X the as kind which of Fed out kind curious just could and then of benefits SOFR if funds additional would terms So in LIBOR and maybe

Yes.

enough are following curve. I think what the is We we Fed the predict obviously to saying. were

rates so upwards, the at in first this targeted And will least be year. half of

the as Michael XX-XX beginning we've We the go out structure markets and back of benefit from that termed liabilities, fact, end to 'XX, don't mentioned, a have 'XX. funding need to the our nice of until

So going we're side. that opportunistic to on be

And million our given portfolio asset think capital dominance, comfortable strength our first on and $XXX the of I the very are of this environment. the in lien we available deploying over side,

[Operator Instructions].

Schleien next Ladenburg. come will Mickey from Our with question

First X.Xx you question rate about I last annualized? on the quarter that clarify, is XX-month ratio is is just basis? . the wanted fourth the that mentioned. interest Or to coverage

annualized. is quarter That fourth the

Good borrowers ability hear. are to And increased? on their given much debt their to among Okay. rates of have flow you average and seeing how signs cash in service stress

portfolios just coverage, it recent of obviously, book, but it BDC. stress did and, that know, manage fixed it's question is than our bigger in why cash our the other while great only portfolio, us, flow a the XX% you is And we as That's for interest on charge coverage. the in test we not

we look lien. co-invest those as $XXX EBITDA up defensive above and find large companies, sectors our at free cash like So we with we're cash just this Mickey, being is similar own in all other BDC million, and because, the and in and mentioned the environments investments, we first securities. flow in average And high safer bigger portfolios companies, flow of obviously

have There in. that is lien big way don't structures the not much of capital junior in we've equity. beyond We invested second

because in that big burden companies interest the an from into have earnings increased other working because need our look charges, place CapEx go they're many to run capital they But don't as spite fixed don't facing perspective, and we we just in that have businesses investments. it, capital-intensive at of

is our substantial and And free we we so find care is flow, still we what what derisk generate credits. earnings, about steady can which cash

from across some that hearing peers others, cyclicals, in are We cetera, more they feel the industries, are are et pressures. broad to starting who

having sectors And it in defer seeing to some just in. second that not given some We're people who interest. the cash our own liens book systemically we're are invested

That's good and to helpful, hear Bruce.

notes in clarify million source $XX repayment you the to repayment? make what January, was the unsecured On of of the funds the could that X.X%

Sure.

before you pre-refinanced as extra. little is And last went we spring. capital also fungible. we a had January that last up, -- had had 'XX rates did in we year, But know, and December we So maturities bit

X.X% that up. before we more had on went rates So $XX million took we at

So of you $XX the from and then could our went rest argue million million came line. the that repayment, to revolving that $XX credit

curious was sheet the you've balance I shrunk whether lastly And Okay. to payment. sorry? I'm -- that make

million I you highlight, X.X%, SUN, of revolver. were that notes $XX with Mickey, The undrawn and -- up just unsecured is, would we pick we other at their also there, as senior -- recall, we thing when merged

we credit adding capacity, actually Rich team have to So been our facility. successful and in credit very the our and expanded

can our So X.XX% ample we -- the existing balance to sheet. get we with have easily

understand. and I agree Yes,

was question this not that program. quarter. the I the existing last in mistaken, to quarter repurchase my regards during which first appear stock May. to some would glad was program, If during Just be the repurchases I'm expiring see to

it Board May? does accretive how extending Given beyond be, would this how the price about that stock and feel program the

likely extend the window the period back but at market, extend going appropriate definitely to we we're it. will We move our price, with to it. open And

advantage the So volatility. it flexibility during take we have to of

if XXbX-X repurchases. a there's increase quarterly it's scope a you're is that of in I'm mistaken, Good -- to plan, the is to know But make terms amount constraints there to repurchasing? of hear. lot those ability I not And Michael, your

answer. depends It on the the is price

accretiveness measuring back us of versus depends buying in it kind So the we'll opportunities of on front new the of stock. in terms of and investment investments see,

us. $XX have that would price. available It million at all to we wasn't quarter, just booked Last

next come Our Johnson with Paul will KBW. question from

Most of questions little for pretty Mickey's been mean, but of well. sounds portfolio is good, it guys pretty performing a have obviously, and is you like it credit kind adding quality I to asked, the bit.

if should your sort request activity, guess, what amendment or would amendment in in portfolio, just in any I platform. your broadly cash the percent Just observed curious, controlling a position? say, across pickup of activity, And anywhere curious in portfolio just either loss, or I you've of even also of in more I'd be your flow portfolio else you say you're

Yes.

So sort X. I QX, come sort to or during were of amendment sit would where have to around trends, call question say Peak has they amendments. got That That's X down. QX where first of, we come the level X steady lockdown XXXX, down today. it, of we back and amendments X of had

in change And over as since last no you... X trends the So lockdown. years I say would

million, Second controlling we a EBITDA question, is north book the in on of not $XXX our are given average position. flow cash that

without have part and sure are there amended it's but generally that consent. be are to rights not of We where do sacred cannot of make be clubs, our we happened

And with we're in mindsets. where speaking, we clubs the generally are lenders in, in

And we've and had position and momentum where later so to brought we them get when really a in months done. get never forward, been X we've

position. We generally a blocking have

helpful. Got it. very That's

more one question. Just

underlying the of the of risk credit I of typical think portfolio, the in just assets And of rating is me, well? in on . ABL in sort that talked about that this borrower -- the portfolio? or like the remind average portfolio the what as you life of underlying But what's past. the I guess, Just the sort

So I remember, talking we're single-B, which we're And cash business, typically the borrowers from double-B, we our no is say. weak what lien first secured. flow in are about different is see and would what

to in So flow strong cash we double-B, where the we to weak book. single-B, be tend similar again, are

again, to of to And in And we're sense. because, the long and collateral. short commodities going going not is against that the liquidation invest collateral underlying lend underwrite we're or live value

is The X. duration duration our average the maturity typically average years. is the same to X loans, closer of With

[Operator Instructions].

Our next James. with question from Robert come will Dodd Raymond

couple the themes A of say inflation market. I'll

which a talked target a you leverage. XXX, commitment made equity size X so upon max JV, the €XX On about you've target Tier or million is

it's that attractive max? the initially expanding kind size about what talked you've to frame consider that the and attractive? the of given, vintage Obviously, again, environment cash you be would even the but you based the XXX that committed, further you be expecting max time given flow Is to the how that on would pipeline is? And get XXXX XX extremely

question. Great Sure.

So first capital across say the initial in that I partner has question, us is SMAs. yes, commitment. of that our form the to would the platform committed other JV

with desire know to continue. the So that we they have a grow us should market opportunity

an And on then sheet. for the as up have ago, again about actually merger we because, we balance few thinking those it you SSLP relates assets was years we really, -- SUN, because the a setting of with to timing, as what so catalyst know, had them

as cycling we so to generate sure can earnings and down appropriate that continuing grow make that on-balance we them portfolio the are we're prudently. redeploy sheet, We the

flow is SSLP. of acquired into a think rotation the I cash you'll what with the originations with together SUNS, loans see So that sheet direct were new on-balance

that. you'll year, is doing quarter, ramped see the can't already have but our portfolio. that that to of this best by that We're end pick guess, Robert, $XXX been I fully million And target the

might both new it, somebody at ABL that's inclined mean, I is price buy cases, the are a mean, prices mean, impacting in How be then I before of it. a equipment I right? manufacturer others, demand, the when Got right? that piece you place. takes got Because the in And equipment, or look rising, up.

pricing collateral you're the collateral And of line the taking how into inflation assuming you flat currently? b, when right when value are you underwrite terms assessing value? -- it, are just in prices account equipment you you Or and assessing want not

Yes.

the a ABL from ABL, segment So we'll on into fan.

are -- of ABL in the the short We control rate. and in we are long-lived updating our underlying business, on their determining terms the our value. base and borrowing short-duration constantly collateral loans, advance we changes monitoring and So that discussed, those as assets, to extent that

sell And lend of market value they jeans be and cost, goods. going liquidation But of cost, in if retailer retail. not you're lending t-shirts, to or cost the lot against those and to not against we a volatility a there's against

a tremendous of cost perspective, built the of there cushion an lending underlying much in amount not have affecting we're goods and of we that volatility against. inflation So the from the in way

goods it's in process. work finished raw. against not And or We're lending

we're then a and yes. -- the finance seeing on -- equipment side, where what So dynamic is

from arrive. of pipeline As been recall prior because have the a supply pent-up there that orders you was but may conversations, did chain placed, not goods -- of disruption,

facilities. on drawing they our down So weren't

we're from benefiting flow past cash a as a the almost DDTL So land. in pipeline in funding of over to

has So chain pipeline, that we're and loosened up. funding supply

we're past investments. So funding

are periods leaning lease towards of offered. for purchase those We rate versus us provides it of which where the which we extending typical leases, the because good leasing extends seeing, income is is existing maturity and leases inflation, in had fixed decision that

how very into get And income excess that's the often our they portfolio.

results, we will as a you But steady think and drip see So trend the net and portfolio from that it's originations albeit steady can of of continue. drip repayment, a growth,

backlog still But to have see dramatic again, do we funding. in orders. that yet we're a spun We've new a strong

for back in Gross questions remarks. or time, turn to no this over so closing queue, are any Michael further it additional I'd At like the there to

for very your thank you all and Just you questions. thank much, great

you we'll anything speak on free QX Thank our else, have to call. otherwise, out you. X months And us. reach you in to If please Bye-bye. feel to

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