Good day, everyone, and welcome to today’s Q1 2025 SLR Investment Corp. Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note, this call is being recorded, and I'll be standing by if you need any assistance. It is now my pleasure to turn the conference over to Michael Gross, Chairman and Co-CEO.

Thank you very much, and good morning. Welcome to SLR Investment Corp.'s earnings call for the quarter-ended March 31, 2025. I'm joined today by my long-term partner, Bruce Spohler, Co-Chief Executive Officer, as well as our Chief Financial Officer, Shiraz Kajee and the SLR Investor Relations Team. Shiraz, before we begin, would you please start by covering the webcast and forward-looking statements?

Thank you, Michael. Good morning, everyone. I would like to remind everyone that today's call and webcast are being recorded. Please note that they are the property of SLR Investment Corp., and that any unauthorized broadcast in any form is strictly prohibited. This conference call is also being webcast on the events calendar in the Investors section on our website at www.slrinvestmentcorp.com. Audio replays of this call will be made available later today, as disclosed on our May 7th earnings press release. I’d also like to call your attention to the customary disclosures in our press release regarding forward-looking statements. Today's conference call and webcast may include forward-looking statements and projections. These statements are not guaranteed to involve future performance or financial results, and involve a number of risks and uncertainties, as performance is not indicative of future results. Actual results may differ materially as a result of a number of factors, including those described from time-to-time in our filings with the SEC. We do not undertake to update any forward-looking statements unless required to do so by law. To obtain copies of our latest SEC filings, please visit our website or call us at 212-993-1670. At this time, I'd like to turn the call back over to our Chairman and Co-CEO, Michael Gross.

Thank you, Shiraz, and thank you to everyone for joining our earnings call this morning. Following a strong year of operating performance, portfolio credit quality and platform expansion in 2024, we're pleased to report a solid start to 2025 despite looming global economic and policy uncertainties. While the path ahead is fraught with many unknowns from the impact of tariffs, changes in supply chains and investor angst, we believe SLRC's portfolio is entering this uncertain period in a position of strength. Our first quarter results reflect another quarter of stability and resilience, furthering a pattern of performance at SLRC, which is grounded in conservatism, broad diversification, tactical asset allocation and downside protection. The appearance of these tenants can be evaluated in the lens of the portfolio's credit quality via SLRCs substantial portfolio composition in first lien loans, low levels of non-accruals, low levels of stress investments and low levels of PIC income. Consequently, we remain confident in our ability to navigate this period of uncertainty and any slowing in domestic economy and to capitalize on volatility from widening credit spreads, create a growing investment pipeline across our specialty finance strategies. Summarizing results, SLRC reported net investment income of $0.41 per share in the first quarter of 2025, compared to our base dividend of $0.41 per share, representing a return on equity of approximately 9%. Net investment income per share in the first quarter withstood the lag effect from the FOMC's 100 basis points reduction in base rates in the second half of 2024 and a continuation of fiercely competitive market conditions in sponsor finance that led to a compression in illiquidity premiums on new investments. The company's net asset value at quarter end was $18.16 per share down only $0.04 from December 31. We believe the durability of our portfolio…

Thank you, Michael. SLR Investment Corp's net asset value at March 31, 2025, was $990.5 million or $18.16 per share compared to $18.20 per share at December 31, 2024. At quarter end, SLRC's on-balance sheet investment portfolio had a fair market value of approximately $2 billion in 118 portfolio companies across 32 industries compared to a fair market value of $2 billion in 122 portfolio company across 32 industries at December 31. SLRC's investment portfolio is funded by a combination of our revolving credit facilities and the issuance of term debt in the unsecured debt markets. The company is investment-grade rated by Fitch, Moody's and DBRS. During the first quarter, the company privately placed $50 million of full year unsecured notes at a fixed interest rate of 6.14% representing a spread to the then 3-year treasury rate of only 190 basis points. As of March 31, 2025, SLRC had $359 million of unsecured debt representing over 34% of funded debt. The company does not have any near-term refinancing obligations with the next maturity occurring in December 2026. Given our pipeline and expectations to expand leverage, we expect to opportunistically access the debt capital markets. At March 31, the company had approximately $1 billion of debt outstanding, net debt-to-equity ratio of 1.04 times. We expect our net debt to equity ratio to migrate towards the middle of our target range of 0.9 times to 1.25 times. In terms of liquidity, we believe we have ample amounts of cash and borrowing capacity to support unfunded commitments with capacity amounting to more than two times over unfunded commitments to non-controlled borrowers. Moving to the P&L for the three months ended March 31, gross investment income totaled $53.2 million versus $55.6 million for the three months ended December 31st. Net expenses totaled $31.1 million for the three months ended March 31st, this compares to $31.8 million for the prior quarter. Accordingly, the company's net investment income for the three months ended March 31st, 2025, totaled $22.1 million or $0.41 per average share compared with $23.8 million or $0.44 per average share for the prior quarter. This was in line with our $0.41 per share distribution during the period. Below the line, the company had net realized and unrealized loss for the first quarter totaling $2.2 million versus a net realized and unrealized loss of $1.2 million for the fourth quarter of 2024. As a result, the company a net increase in net assets resulting from operations of $1.9 million for the three months ended March 31st compared to a net increase of $22.6 million for the three months ended December 31st, 2024. On May 7th, the Board of SLRC declared a Q2 2025 quarterly distribution of $0.41 per share, payable on June 27th, 2025 to holders of record as of June 13th, 2025. With that, I'll turn the call over to our Co-CEO, Bruce Spohler.

Thank you, Shiraz. Before I give an update on the portfolio, let me spend a minute reminding shareholders that our multi-strategy investment approach, which spans both specialty and sponsor finance credit investments is designed to deliver consistent returns and protect capital across market cycles. Asset-backed strategies often exhibit countercyclical characteristics, benefiting from periods of market volatility and capital dislocation, while sponsor finance can outperform in periods of economic expansion and robust M&A activity. The low correlation between these investment strategies enhances portfolio stability while diversified exposure enables us to capture shifting market dynamics without compromising our credit discipline. As Michael indicated, we've deliberately tilted the portfolio to specialty finance investments, which we believe offer superior downside protection and more actionable risk controls relative to traditional sponsor finance-only portfolios. Our specialty finance strategies include ABL, life science and equipment finance and are underpinned by high-quality collateral such as accounts receivable, finished goods inventory, commercial loan portfolios, essential use equipment, as well as intellectual property. In most cases, the assets are governed by dynamic borrowing base frameworks, which enable real-time monitoring of the underlying asset performance and leverage to manage our exposure, which include eligibility tightening, advanced rate adjustments, and cash dominion. Unlike sponsor finance loans that can delay active lender engagement, especially in the finance investments, allow us to engage early with our borrower intervene proactively and take steps to ensure repayments. In the current market environment, the relative value in specialty finance is especially compelling, not only offering greater structural protection and real-time risk monitoring, but also delivering what we believe is a superior risk-adjusted return profile compared to cash flow lending. Our flexibility to allocate capital to the most attractive risk/return investment opportunities is especially critical in a market where selectivity and downside risk mitigation or paramount. Now, let…

Thank you, Bruce. Concerns about earnings and credit quality in private credit and BDC portfolios continue to remain top of mind for investors. We believe many of the decisions taken at SLRC over the last couple of years have put both the portfolio and the company in a position of strength today and view the consistency results as a testament to SLRs multi-strategy approach to private credit investing. The operating environment remains highly unpredictable, but we believe our 15-plus-year track record with de minimis losses and a successful history of managing through periods of economic distress should give investors comfort to expect more of the same from us. The SLR platform has grown meaningfully over the last couple of years, creating a diversified commercial finance company with broad investment capabilities and deep experience to a 330 member team. Our multi-strategy approach to private credit investing emphasis on preservation of capital and dynamic portfolio construction with a specialty finance emphasis differentiates us from a majority of our peers and provides us an investment portfolio that contains very limited investment overlap. This platform growth, along with the stability of performance positions the company favorably with momentum across our businesses and a growing investment pipeline heavily tilted towards specialty finance investments. We are confident that we will remain opportunistic and prudent as we deploy capital with discipline and conviction. In closing, SLRC trades at approximately a 10.5% dividend yield as of yesterday's market close, which we believe presents an attractive investment for both income-seeking and value investors and offers a more diversified investment portfolio compared to cash flow only private credit strategies. Our investment advisers alignment of interest with SLRC shareholders continues to be one of our significant hallmark principles. The SLR team owns over 8% of the company's stock and is a significant percentage of their annual incentive compensation invested in SLRC stock each year. The team's investment alongside fellow institutional and private wealth investors demonstrates our confidence in the company's portfolio, stable funding, and earnings outlook. Thank you all again for your time today. As we know, it's a busy day for those who follow the listed BDC marketplace closely. Operator, will you please open the line for questions.

Thank you. [Operator Instructions] And we will take our first question from Erik Zwick with Lucid Capital Market. Please go ahead, your line is open.

Thank you. Good morning everyone. I wanted to start with just kind of a follow-up on some of your commentary about the pipeline being more weighted towards the ABL and equipment finance opportunities. I wonder if you could just maybe put some rough percentages around the pipeline for your kind of main lending verticals as well as touch on where spreads are today versus, say, three, six months ago?

Sure. Great question. The pipeline, I would say, is 75%, 80% weighted towards ABL in particular. And as a reminder, our ABL strategies cover not only regional areas of focus, but also industry focus such as health care, digital media, apparel in connection with the Webster acquisition. So, it's across industries and the country. So that is the dominant part of our pipeline. I think as you look at price spread business, this is an all-in return business because there are a variety of fees that go into the eventual IRR. And this has been one of the hallmarks of ABL lending is that it doesn't have the same variability. It didn't cap out the way cash flow lending did when rates popped up to 5.25 base rates, but it also doesn't compress to the same extent. So, it tends to be an absolute return asset class that moves between, I would say, 11% and 13%, depending on where we are in the cycle. Today is probably in the midpoint.

That's helpful. Thanks. And just in terms of -- I think you used the word opportunistic in terms of cash flow lending opportunities that you would choose to move forward. I wonder if you could just kind of maybe generally give kind of a description of something you've done recently, where you did see what was attractive about cash flow deal that you've done recently?

Yes. Most of what we're seeing, and this is consistent with the broader cash flow environment, you're not seeing the creation of many new platforms. And so what's attractive to us is to finance a tuck-in acquisition. It's a seasoned platform that the sponsor has owned for a couple of years, probably only have a couple of years left on the facility. So, it gives us a short duration and an ability to re-underwrite in two years, three years, determined if we want to stay in or move on. And again, we're financing an add-on acquisition, so the business is growing. Typically additional equity might be coming in alongside that. And it will be in a sector that both the sponsor and we are extremely comfortable with. So we saw this similar dynamic in dislocation in 2023, and we're able to take advantage of it. So that's the typical opportunity that we would see. The ability to finance an acquisition or two as the sponsor is getting closer to potentially exiting that investment.

That's great color. Thank you. And last one for me. It looks like the contribution from Kingsbridge in the quarter was up relative to where had been in the last few quarters. Just curious if there's anything kind of onetime in nature there? Or is that a decent run rate going forward?

Yes, it's a combination. There's some onetime where they had some gains from some asset sales, but it is continuing to perform well, as we mentioned in our comments, this is an environment where borrowers will extend their leases and that's just falls to the bottom line as additional income. So we're cautiously optimistic, but there is definitely a little bit of onetime elevated income in Q1.

Thank you. That's all for me today. Appreciate it.

Thank you.

Thank you. [Operator Instructions] And we will take our next question from Melissa Wedel with JPMorgan. Please go ahead.

Good morning. Thanks for taking my questions today. First, I wanted to say thanks for talking about how you're monitoring tariff exposure in the portfolio. I may have missed it, but did you give sort of a ballpark estimate of tariff exposed companies in the portfolio?

No, you didn't miss it, as always, Melissa, you're on top of it. Specifically, let me just comment that as you think of the industries where we are lending into health care services, business services, financial services, all domestic by definition, it would actually be difficult to have much exposure just because we're service-based, US service-based and recession resilient businesses that are not dependent on the global economy, broadly speaking. So as we look at it, we really think less than 1% of the portfolio has any direct exposure. There are a couple of health care companies in life sciences that may manufacture goods in Mexico. We think those are exempt and a small part of the business that those companies do. But we're trying to really dig into every little opportunity to face some headwinds, and we feel very, very good about it. I think as we also mentioned, corollary is we're more focused on policy around health care policy than we are around tariffs given the construct of our portfolio, will say that in our ABL portfolio, there are borrowers because we're financing inventory in a number of cases that are going to struggle. But because we are lending against liquid collateral, we feel extremely well protected. Obviously, we're monitoring these borrowers. And because we are monitoring and have a front receipt on trends in their receivables and their inventory turns, collections. We can see if they're beginning to struggle and clamp down on our advance rates and make sure that we continue to be protected. So it's not to say that our ABL borrowers won't have some headwinds but we feel extremely well protected given both our collateral and our underlying controls and ability to monitor that risk real-time. But I think broadly, we're more focused on some of the policy initiatives around health care as we touched on and how that may impact not so much existing investments, but the future pipeline.

That's very helpful. I appreciate the extra detail there. To follow-up on a comment you made about the equipment finance business, and you're seeing borrowers wanting to extend leases rather than go by more expensive new equipment in a post-tariff world. Is that -- why is that repricing not extension? Is that why the yield on that portfolio was up meaningfully quarter-over-quarter?

It is. But as I mentioned also, there are some onetime gains as they had some assets that they were able to sell off because our equipment finance business is selling off streams and keeping the residuals, and there is profit in that residual. That profit increases to your point, if they extend the leases, because they have sold off the stream. And so that's additional profit that falls to the bottom line. It's too soon for us to know what the run rate of that will be. So there is some onetime, as I mentioned in Q1, but we do think that there's an opportunity to have elevated income subject to how the tariffs play out because, again, the borrowers, both because of the increased cost of new equipment, as well as the uncertain economic environment, it's easier to extend the lease than to start expanding capital expenditures.

Make sense. Thank you.

Thank you.

Thank you. And it appears that there are no further questions at this time. I will now turn the program back to Michael Gross for closing remarks.

I just want to say thank you for all your time on what we know is a busy earnings season. As always, if you have any follow-up questions, please feel free to reach out to any of us. Have a great day.

Thank you. This does conclude today's presentation. Thank you for your participation. You may disconnect at any time.