SLRC - Earnings call transcript Q1 2019

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Operator

Good morning. My name is Keisha and I will be your conference operator today. At this time, I would like to welcome everyone to the Q1 2019 Solar Capital Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over to Mr. Chief and Chairman Gross, Executive Officer. Michael

begin. may You

Michael Gross

by Peteka, Welcome Thank you would Limited's Capital XX, our I'm by Chief start morning. Bruce and you Officer, quarter Co-Managing you much and XXXX. Partner. Rich webcast today and here Capital very Operating to joined Chief earnings Spohler, begin, the forward-looking covering March Financial and Solar statements? ended good our Solar call Partners Officer the for before Rich, please

Richard Peteka

and remind to property disclosures to made release attention statements, will strictly I'd your to also are release. that which today's conference involve website like later that Capital customary today I'd today's be performance number note in are webcast Michael. Thanks, prohibited. in any earnings events to our forward-looking broadcast, like financial regarding may conference as call disclosed future financial and condition. or are course. relate webcast and and and everyone the at in call uncertainties. being that call performance, Of form, Limited unauthorized any replays they constitute of is Please our press recorded. webcast our are not Audio guarantees results future on the press call made being or forward-looking call information. our statements These risks in Statements of future www.solarcapltd.com. of available This our Solar condition this of or a

in from future number time our factors, materially a a as indicative to Additionally, of SEC. with cash the differ performance described those result is results. filings Actual may of results not including of time

or obtain Executive do law. our duty statements call Chairman any Chief like no us forward-looking At latest and time, website the XXX-XXX-XXXX. please unless I'd update Michael back to To required our Officer, so to this call Solar of filings, Gross. our turn to SEC Capital at visit Limited undertakes by copies to

Michael Gross

Rich. you, Thank

quarter, was history the and fourth Solar Capital's first quality, results, portfolio share $XX.XX our operating March recovering long-running selloff and value the per preservation increased prior earnings Capital XX, Solar increased market in continuing At substantially credit net of strong asset For value of asset power. solid delivered net share XXX% sector per from quarter, the by performing quarter. the $X.XX our XXXX,

generated paid by During earnings $X.XX supported a and Solar per the growth. continues net Fundamental performance quarter, income Capital and conditions credit share per economic distribution corporate $X.XX of investment be share. to of strong, stable

to coverage flow These flow cash and investments return and to We frothy discipline collateral finance cash However, is middle attractive the specialty highly lending Finance the and paramount and absolute that Nations tight competitive. our Financial, niche lending, aggressive relative face are Crystal businesses, provided elevated to structures, achieved our life continue it have risk. internal originate extremely Through pricing market value on strong maintain double-digit with structural businesses protections. an science Equipment basis. rates of investments in strict market conditions and continued flow be believe lending cash continues lending in of in

predominantly During on finance. quarter, new the of million basis, $XXX comprehensive investments, in first a originated we specialty

itself. having take by cash net comprehensive spread without our portfolio sectors to has enables XXXX. approximately of average cash such comprehensive On XX% X.XXx fair XX, achieve our face or XX% cash portfolio repayments of risk December asset-based weighted be was market, more or energy. March at flow at growth. loans compared Solar as investing finance to additional Capital yield cyclicals leverage credit finance construction our to transactions. the Our flow portfolio point in our volatile us XX. loans value we approximately X.XXx selective to barbell in those view end at middle a specialty leverage move lending, At second underwriting leverage of Not protections but March the prudent lien cash and conservative income to risk available We loans as across were to $XX our in as management specialty intend will simply to flexibility do be approach, leverage. our superior another of market million XX% up closer from $XXX X.X lending to carry by opportunity investments, long-standing in with portfolio use only receive compression target the strategies, of of yields growing investment in flow the today's in resulting more our from X.XXx allowed of increased highly we continued flow our to market million We with our investment XX, was and distributed tool. presents the the portfolio Consistent of higher in approach In

Importantly, has raise to debt having Solar today reach target capacity to additional Capital equity. sufficient our without leverage debt or

niche, We our and specialty finance emphasis secured lien SLRC company into with diversified, are first results in invest continue specialty pleased loans a develop current with the to on a senior loans. efforts of finance to

Investment for on Adviser. a update quick Now our

late Solar's with approximately the Rich an of Capital high across BDCs, million. provider increased portfolios. platform million much transaction, be while to The diversified $XXX stringent Including our take platform negotiate back this through with investable over strategically a announced for equity private billion opportunities you already highlights. turn the speak the to call the X new Officer, total scale terms last Partners SMAs to of year, time, across financial Peteka, our with SLRC Capital for enhanced of expected At commitments ability $X.X Chief Solar capacity has resulted has As to a over reminder, and $XXX meet as in the funds' more investment platform great given closing Solar to credit Partners' I'll leverage, solutions positions ability a in the now investment capital. This funds Financial underwriting SLRC criteria. as maintaining and

Richard Peteka

Michael. you, Thank

XXX to $XXX.X of per considering company's compared share combined At XX, portfolio When March had asset portfolio was compared XX. $XX.XX outstanding share companies fund the December available at investment from at net base in value million fair limits. available $XXX equity approximately net XXXX. capital portfolio industries Limited's compared XX, at XX Solar had or December At to billion $XX.XX to sheet subject XX, credit debt of or portfolio across the to million in March Capital facilities Capital's of March XX, XX XX, value a credit a X.XXx $XXX.X market Solar equity balance on industries had or market XXXX billion at with XXXX across Solar $X.XX Capital to $XXX.X XXX companies facilities, fair $X.XX value Solar NEF, non-recourse Capital leverage Crystal million X.XXx million to million December and debt and at XXXX. from capacity of $XXX.X borrowing debt net to growth, per

the P&L. to Turning

versus XX, average investment to months an XX, December per XXXX March March the average $X.XX or ended XX, $XX.X million months or months months company XXXX. XX, $XX.X income X XXXX. investment the the December gain net for million XX, ended of months $XX.X of quarter and for per million $XX.X million ended million the losses share net Below totaled increase for million March $XX.X the ended March $X.XX months For ended gross the share share months versus share $X.X company X X XX average $X.XX net compares operations the unrealized $XX.X totaling to XX, fourth the $X.XX assets million months ended first from compared of income December compared for ended December This per totaled a had or to unrealized company's ended XXXX. per the the totaled in million XX, average or XXXX, Ultimately, for net resulting million X net for X Accordingly, the line, for XXXX. realized increase Expenses $XX.X $X.X the million X the the for XXXX. $X.X for X XXXX. realized and quarter had X

$X.XX QX the With Directors June Finally, to turn Officer, on that, declared over share, shareholders a July Bruce of X, XXXX. payable XXXX XX, Chief of call Operating our distribution on I'll of Spohler. per Board to record our XXXX,

Bruce Spohler

Thank you, Rich.

portfolio the representing on based our weighted disciplined investment downside of X our our the the average portfolio to Let scale value our reflecting sound, me quarter-end, remain portfolio. was and risk risk. At of protection. rating on turn of market Overall, risk amount focus of companies X underwriting fair financial with X.X rating health X the at measured least to

X% As across was portfolio, of the strong underlying our list was quarter-end. fair only portfolio the portfolio and XXX% at on of of performing watch value further at indication the fundamentals

quarter-end, at secured under lien issuers of XX% Our portfolio. of per $X.X loans. across comprised highly or issuer approximately of X.X% the Also of senior comprehensive industries. and encompassing diversified, over consisted portfolio XX the in-secured investment of average The first just second-lien just XXX billion XX.X% million $X was is portfolio loans loans, secured XX% over

our all specialty $XXX net risk this We At a been investments. of strategies. cash we under flow compression portfolio focused second Including to commercial replacing lower maintain were the repayments the yield higher cash $XX with spite resulting X/XX, done market. spread activity weighted of reducing continue portfolio was million which growth quarter, first the XX%. higher second-lien lien ABL however, our approximately Through to return to originations and carry across our cash in our verticals, investments. yield million, our under flow in just X first for asset yields, stay business finance our totaled $XXX investments, double-digit than lines, average exposure lien lien the by exposure able We've lending risk across finance flow have our on niche higher also just across but million level in the

with us investment Solar Capital a scale across increased advantage our strategies. Partners' of competitive provides all

ability our science capabilities. loans sourcing our larger for has speak example, For lending enhanced life best-in-class science team's to life

each X provide on me of an let investment update verticals. Now our

flow First, our business. cash

companies business senior and which invests $XX million. upper you bonds, our middle average of EBITDA secured are lien know, approximately an stretch first cash sponsor-owned lien in As first to market investments predominantly with flow

did decision in our either $XX approximately or criteria. and flow cash pricing which loans The million. structure first refinancings portfolio of to that meet originated in investments the loan our reduction terms of flow result several of During the $X of we quarter, degradation due in in was first-lien resulted our investment repayments not to secured had approximately participate not investments the senior our cash of direct million

our flow segment Given portfolio of total $XXX time. end, this quarter portfolio. million, the intentionally market flow was cash we at shrink XX% flow At our cash heated our cash continued representing conditions, to allowed approximately

to throughout in borrowers our digits, the our second lien investments trailing reflecting see continued mid-single expect positive We average flow XXXX. EBITDA in cash flow At weighted grew of and quarter-end, fundamental XX-month cash reduction our continued revenue trends. segment

cash our in segment, leverage through Xx, and interest companies investment portfolio the our stood flow at X.XXx. coverage For over just was

the yield prior addition, In with portfolio average was quarter. XX%, weighted cash flow the just of consistent under the

to of approximately first our Now asset approximately in The our comprehensive portfolio strategy: by At repayments turn asset-based $XX Since we $XXX we $XX XX.X%. based December funded of was portfolio based portfolio let grown represents lending yield new just quarter, million this approximately net portfolio resulting at In our XX%. Financial. Solar. average have of of the million, 'XX, which weighted the over million Crystal had quarter-end, and $XX asset investments was asset-based XX% million, me of growth. of

with Our the to a yield on dividend equating million prior quarter ABL first Solar consistent which of cost, paid XX.X% quarter. $X.X is platform

was to $X.X turn XXX $XX just was NEF and of distinct equipment new quarter-end, NEF's NEF, portfolio just quarter average amortization At an million million. with investments Now issuer over me finance repayments totaling let comprised the $XXX of and under first had in $XX our and approximately of had million borrowers million. strategy. size

sheet over a XXX% As XX%. on NEF's business wholly-owned held The our XX% our portfolio are yield weighted in well loans. Holdings. our in in NEF's finance the financings our portfolio. of directly balance portfolio for as of - portfolio has grown average both was as investments XX%. comprehensive this This equipment represents subsidiary overall are just end loans XXXX, NEF of lien first NEF equipment reminder, Solar's Since

Now life science let provide on finally lending an business. me update our

December our from XX our Here, under science portfolio. million. of Life XX% The consisted loans with portfolio $XXX of totaled $XX million of average quarter-end, life XX% comprehensive represented just investment science increase portfolio at overall representing a borrowers an XXXX.

term lien quarter, Diagnostics, $XX the platform the loan to first $XX During committing SLRC, committed million the million SCP to of a loan. with GenMark for fund Solar,

new yield Solar the collective incumbent boost on sole Solar's as its as loan in just gross has role complete our final earned increased well $XX investment additional an fee an realized enabled as as XX.X% refinancing This the final carries lender. as the as lender the us further. that a prior under this IRR fee, net will of Including all-in first-lien to scale yield platform's well GenMark. million XX%

structure portfolio During our additional investments million, $XX with was team of the The warrants. life in repayments SLRC's yield continuation from reduction several our approximately gradual originated driving activity which over attractive and, resulting our second quarter any dividends. the our in more science we first the investment the of $XX loan assets just fees finance success first conclusion, both investment life and in new specialty a and our years: science generating flow just covers increase yield portfolio to finally, excludes portfolio are been million quarter, income net more themes last get million that that of of cash $XX In the able portfolio portfolio over have of XX.X%, returns lien to average over a and risk-adjusted weighted than leverage, totaling during represents exposure increase exposure where and growth.

that diversified strength in sidelines, powder deploying of from sitting and dry be believe supply/demand the finance origination with our substantial will lending, available private we'll the of equity back benefited clearly cash have in turn to well middle Longer-term, existing for companies our Michael. verticals. continue our and as time, to We coupled market call lending, very a retreat creates capital. amount specialty the on refinancing cash wave At I'll which market prudent record the banks of from middle sources disciplined we flow augment flow this as approaching the attractive dynamic

Michael Gross

Bruce. you, Thank

commercial SLRC middle market of to verticals portfolio as strategy finance senior results. continue company, flow firmly established migrating a is to drive long-term Our providing superior businesses. to diversified now loans the solutions finance diversified secured cash capital specialty developing the across and structure

and flexibility across to platform credit discipline Importantly, sticking best our capital origination allocate us the to diversified to investment while greater scale risk/return opportunities cycles. affords our

provides in which have been The origination we portfolio, per of navigate markets disciplined run always XXs. investment and accompanying We believe frothy peer quality capacity income is grow. an clear enable compromising deploy the prudent solid leverage investment our We investment target philosophy has share diversified in At at We've Capital sustained which the a Solar net verticals. well a result for of and history outperform maintained credit not strong portfolio credit will conservatism substantial the have from powder platform in to differentiated to dry face yield. believe remained foundation our a path pays and a will recent we in be seen to low we the to differentiated in lead debt attractive of in quarterly are via current position cautious. us environment, leverage net credit assuming to X.XXx rate remains environment. markets that equity and group. be that If shift, our late the us the to any the It does cycle our in credit to But cycle investment believe it new the volatility to equity, believe whether opportunities. to we

for the clock As increasing increase results a XX'o first an our in Senior Board basis, distribution will At our earnings be of shareholders. Directors earnings we'll to hosting Solar morning, sustainable call further this evaluate of quarter Capital. our

see thank morning. middle Solar open senior continue this of this please you to the deal the Operator, flow. vehicle your traditional market value we clients' could time to our origination proposition line provide needs, team's for in you to and enhance Capital's ability We much continuous this very capital benefits our Our for meet financing through questions? ability secured to

Operator

first comes our And from Instructions]. [Operator Robert question Dodd.

Robert Dodd

kind what's that's million? the dividend income and exactly. footnote, like of - million, expect that the you at level? $X.X On that NEF. of looked the I've the of that you and - sustainability side, color the that it And that million from do $X.X Crystal hard on fourth quarter come didn't more to was looks any parse so obviously, Can from ticked $X.X up give source of or What's to there

Bruce Spohler

Sure, blessed and aircraft that a And and for some dividend QX. will leases. that great have have we on as portfolio we've that we with happened been those an income, question. Yes, years getting periodically owned happens, out of extensions in and QX number

So I a basis. on going to would to income but modify aircraft. of say and it's to be NEF, consistent unlike steady that underlying as going It's that more more dividended there leases Crystal not was be episodic little we out on bit be the a portfolio,

Robert Dodd

the it. about other the since have the got the And - look kind on I focus that. picture, Got I big Thank worries yield portfolio of then particularly and any don't at on first, one, if credit but mix it, - you. quality of the

there? yield mean, at Crystal And NEF basis you've and got deployments. slightly And you the give price there's for look kind competition the where color? average portfolios, borrower conscious yields can QX compression? focus you to loans? Is kind I QX. XX - so, that from market that's resulting points of those they decision to are dropped obviously, on do weighted side, more any think part of in to in XX like Or it your if it terms - on mean, of look you is a different we on on maybe the I a the mix

Bruce Spohler

Sure.

increased and comments the verticals. few the a really from un-invested opportunities across attractive our basis, the and over As capital find scale platform specialty risk very quarters, return last from adjusted of you our we've substantial finance know, have

teams for little a relative very set their returns so portfolios. are various not our to expand have they search given necessarily at taking but risk direction that but their bit yields, market attractive less So looking to expand some optimum to to we their the abandon

And in it marketplace, little higher a sciences, as because bit NEF, seeing it it's be compression, team so core well the we are life investments but in offer the in it that expanding some really Crystal spread yielding. be as is their be

or So market dynamic. a a driven it's by driven set. trend not It's more opportunity by broader

Robert Dodd

can kind assets, yields XX.X%, public But now it. companies capacity you but at the asset, would but on it, Diagnostics, on to that the of yield be risk again, coming attractive Got bucket it should has to look - you you life maybe that more where the do non-qualified - life sciences as be got XX% got you by I When mentioned where return, GenMark XX.X% utilize the yield more grow And GenMark non-qualified portfolio at it do you down? yield. sciences, would expect XX.X%, Obviously, - expanded we room. if follow-on you the more of more when you've weighted obviously, now public the say see in moving fair a to itself... an - just maybe maybe probably that companies, low with

Bruce Spohler

Sure.

think particular, and class Crystal this all I the to only short and has are in X thing in think asset the also science, both refinanced here is team I note duration NEF. These and and years. times been GenMark X life case the already in we've

any that XX I'll we at months. I success XX.X% So own at excludes, be love surprised to XX expected if but to seeing stated more I shorter GenMark you than And we look fees. duration, the the to the look it maturity, if if given yield, IRR mentioned, as

warrants will We XX% we sometimes, less fees. XX%, as XX.X% as returns XXX less, realized but underwriting still be know, depending XX.X% little of that as a to face typically not you you the portfolio. case, and be XX.X%. will and on to as the return see but that see basis versus a points expect XX% relative slightly XX% success to on think be elevated would I dramatic It'll So

Operator

[Operator our Ladenburg. next from And question comes Schleien Instructions]. Mickey with

Mickey Schleien

margin portfolio structure were slow I'd if net for down how morning. to LIBOR like think Hey, the economy to trends by decline. you your envision the asking potential when good about about versus would we interest to the start

Michael Gross

therefore the generally expect that exception slows flow to Well, would equipment we kind and of [indiscernible] science, to widen cash expect to Crystal, in economy but in a of spreads spreads increase. if really, actually interest lending, down, economy life slowing would we to probably the our leasing, in margin and to certainly widen with in margin

Mickey Schleien

flow slowdown? Okay, your segments how in business, from for you helpful. And your develop? capital in would demand that's And expect a you to apart metrics credit the develop other expect how cash would to

Michael Gross

dry performance there Crystal's for refinanced, get a a point, wrong are run are your or at platform would not that builds see powder new to economy, and earlier the can issues so doing up new refinancing were advantage in is what of change. huge those either better loans we there speaking, to much of with in get a time. change I dry think that a need in expect be and a comments I to slow which if into to greater generally would perspective, you think down as in From LBO slowing take Bruce the those where pricing we refinancing terms But see you'd won't will slowing his so need formation environment. run So refinance. ABL, into that is roadblocks up mentioned still economy, capital just in companies

us, we easily environment. of Crystal's see very a a that grown business in for But economy. has portfolio, And size the so benign nicely face difficult double more in in could credit

Mickey Schleien

Thank you for that.

Bruce Spohler

I think... And

Mickey Schleien

I'm sorry.

Bruce Spohler

bit because are expenditure funding they equipment finance nature. of little $XXX of lot think I portfolio, it's slow million $X.X by extremely a with diversified I portfolio business an a But a million think loans. capital would that average our projects

that in for plans. the drugs stop have that funded They're not to XX going fully So to think developing going really been as on that a bit and or of And to beats years, its life that's it generally and funding a drum economy. would XX shrink. is business mentioned, Michael own for sciences, for take devices and I medical - then and fair lot just because time companies what's of

Mickey Schleien

are If that the companies in could which is in levels. I some helpful. reflect and at you something in themselves? distressed developing healthcare Or have you, switch HIS Bruce. the PPT, Does trend to gears, those of That's sector? that both due somewhat sector just two Thank marked happening sort

Bruce Spohler

Sure. that same metropolitan market, the physical New therapy PPT roll-ups, Definitely, having great sometimes it together, surgery York physical finding there's had of than dominant company-specific. et integration what systems, are issues. in area, they is the just knee a business. in Phenomenal a is collections down, position business, getting healthcare anesthesia, therapy, myself. But we're market getting on these revenue be coming cetera, lot so operational issues rather replacement

company no is across very healthcare we life portfolio. so broad And as There our specific. portfolio healthcare science and trend our look

Mickey Schleien

more Okay. gauging couple And questions may, a I if on risk. just

I those borrowers provided you average the of are how those give But based, LTV in are equipment of of EBITDA can since sense cash the the ABL in a your loans? more-asset borrowers flow segments, business. and the the and big think you perhaps financing

Bruce Spohler

Yes.

Many analogous to company there them but as business asset million, EBITDA they EBITDA. our segment. flow to have sheet, in will the will are a $XX our of ABL million underwriting size result to source side, million, think you as $XX as in, you be have closer on but know, that thesis, a of substantial Average of equally payment $XX balance substantial basis, EBITDA Crystal looking our companies. than primary is But EBITDA. and know, of assets our as rather do So upper-end mid-market you EBITDA, cash

borrowers. value through to much So we other are their assets. up larger size from And mentioned, Crystal the science base, as going and particularly enterprise as continuing perspective an at life close same verticals, our are Crystal team, our to scale capital we our is

with market So cash we which I have argue life values than million average is number borrowers cap, of $XX our enterprise sciences, EBITDA. many public larger would billion of a $X flow at

the verticals. increasing across is So size all

equipment. where is lending their critical against really exception to companies small the clearly think I NEF, mission we're

Mickey Schleien

terms And businesses. mentioned Bruce, I funded prepared life these fully of think your are in remarks that typically you in sciences,

it's portfolio? about cash it think consider? risk should else is we not how that in regulatory burn, we If or So should more something risk

Bruce Spohler

Sure.

founded to of loss. XX, $X on know, the the they they I for Over going business XX at and refresh XXXX, years, default, years have billion you never in record team XX to this invested been Mickey, has think just benefit the over that, everybody's us a payment XX, Capital. had for joined that when a that doing track call, never back GE have mind

that record diversified is an investment we're on the and risk equity incredibly think highly there the The are And trials longstanding nail we, more here others little lender. a throughout invest the through you a the hit So a who bit take Phase track cycles. across portfolio might companies key are going earlier - late-stage we unlike - clinical is I when head. or I,

EBITDA because are even profit. They don't So there positive have lending, they companies, unheard are times many investing still often which is of venture have in often and have revenues gross to market. time VC generally or public companies will which the business community to break-even either get flow be to sold into the in the cash at large the that strategics by

access do of have milestones, form they the real sure to burn of have the form either documents to to on has XX is the get or following making really make you're XX, in team in these sure, XX, late your the our approvals. well years break-even, for loan, making regulatory until focused So the sure historically been risk covenants, stage, very to obviously capital we'll which liquidity teeth as flow fund companies revenues point, the in that cash they as before that we making

that you risk a off business, lend we'll because revenue really of where hive drug one against not stream. portfolios expected, So or regulatory royalty against specific devices our we're drugs. from say is lending drug projected future and This different is

devices every and the We there asset, device or of cash, all all that to the have drugs is is portfolio drug make or a the against of and IP, make we so a one sure that going no corporate loan of break company.

Mickey Schleien

That's really my I helpful, questions, your time are today. Bruce. appreciate and all Those

Operator

And comes [indiscernible]. from question our Instructions]. [Operator next

Unidentified Analyst

for taking guys. my morning, good questions. Hi, Thanks

credit, way in into market. increasingly been lenders, always core have of in crack middle in lot guys making doors trapped conservative showing specifically their syndicated but market those the really You more certain the a broadly some

Just in where credit be the even to wondering if environment the you're more shifting your and cycle current even underwriting, more than so, you conservative have historically. is

Michael Gross

Solar structures And we because we've compromised be don't doing think the in funds it we levered but are that and about to asset cash lending, we lending, X.Xx, at less talk is shows deals there mix. doing flow I the we're to do that the in are we're about moving point conservative Over of with structures. Senior, the where cash the just active to covenants, clearly seen so flow companies. being our really many when which by leverage is through average

we're cash you we As appropriate lending walking net know, situations in away we're both yet refinancings are at feel Solar for the where we and because risk. new - from and flow not primarily decliner that's structures a are

Unidentified Analyst

it. refinancings you by that, certain your And didn't predominantly Are debt that know or guys done would refinancings. sticking in BDCs? prepared mentioned being funds Got those participate with I say you you that private - Michael, other in remarks

Michael Gross

Both. both. both. is answer The I mean,

in lot I think the the - I of frankly. think funds, we're seeing private it debt a

investment unfortunately, vast private for issues strategy, them the a in [indiscernible] amounts of typically really time of that that's and funds very lending has of have one and and record X periods period this hopeful we're we're funds, the of raised limited majority capital one years. have it's been think of capital all I encountering credit the all

it'll and down. in hopeful compromising And frankly period of some capital in to of having short time, system a that But on lot deployed was point seeing and at of on structure a the be putting of risk. go stress we're that terms the so you're

Bruce Spohler

this the of is remember, But fundamentals. strong against backdrop

you the operating good across growth, cash our flow As we in fundamentals at of EBITDA we through, have revenue portfolio took very growth. level terms

know, willing most and But type from people today, facing bet and benign just benefiting long-term. of So as you point from we've away when We that some covenants covenant-light tailwinds assume not the environment, of shied only matter. at next fairly the to in comfortable are are going years so matter matter and they're all we're a to on they couple that transactions. very

Unidentified Analyst

Appreciate with ABL driver stress you? And portfolio through year Got biggest of that the be the of could we detail the retail, remainder Crystal it. in and growth for continued potentially expect the there. should

Michael Gross

that - is. been you retail continue to to it's because But challenge growth so in think it's incredibly just hard see with has portfolio [indiscernible] as Again, would names as predict it more I Crystal episodic.

Unidentified Analyst

finance Got it. are those have wondering And any mentioned I portfolio of Are know loans? cash you X specialty you flow these I'm X% guys just could watch is if a breakout. in had listed. the provide Or there you of verticals? about of all any other the

Bruce Spohler

flow cash all they're Yeah, loans.

Unidentified Analyst

know And it. me mentioned hop and you dividend. the queue. in Got one I'll guys back the the is last I from Board evaluating that

are Is Just for they disclose, does Or NII to that to what exactly see. could a looking what consistently? to that's done you they mid-XXs north I'm sort it increase? that? have exactly potential the need of extent it just of be wondering

Michael Gross

The Board firm parameters. has not set

point therefore as where us cover [indiscernible] willing from in and to we to we're have I dividend that to continuing comfortable think we past. to a something they're the a us are that looking sustainability is for - propose to underwrite for really guidance

Operator

[Operator our And with next Lau Instructions]. comes Owen question from Oppenheimer.

Owen Lau

but do thank and being were you questions my morning my of question. I Many modeling question. quick Good have asked, a for taking

view quarters. expect are updated to leverage target pipeline, about target range, Thank at Your past give on us given bucket the reach each current your strategy, you in versus XX% your your leverage $XX over equity could you. quarter your million portfolio capacity your grew you ratio? overall where the the please and an can when you by debt X And you

Bruce Spohler

you predict. comments, We're diverse in as from and the trick to given the strategies, have growth you've that that, heard pony, environments, the as to we by question one being economic a allows however, that's not given hard some our strategy. diversity us of aren't Look, varying and X blessed, demonstrate correlated, know, Yeah. completely so

X The a attractive to be new at I X.XX. along finance, specialty quicker. one platforms platform, thing either So or could identify a approaching that it our if from accelerate existing of think that that we point in that high add continue expect the some level, is acquisition target an to were to year we move to next to grow leverage could

Operator

comes Johnson next with And KBW. from our Paul [Operator Instructions]. question

Paul Johnson

Good Morning, taking Thanks guys. question. for my

by appreciation for quarter's I in there from was Was have guess the recoveries one quarter. that? mark-down of I'm or just that values XQXX any of your question this one-time last curious today. the driven Just primarily volatility? portfolio drove the that Or kind individual investments

Bruce Spohler

It was broadly the market across the really portfolio as well speaking. as reflecting our commercial rebound, finance businesses

not had portfolio XXX% of given markdown low level about a not nature, talked fairly in watch in we As was the felt performing the and fundamental, we technical that relatively list. QX,

from you can in of markdown QX much So the almost it up QX. tell, as back pretty recaptured all we've

Operator

any now over call turn I the Chairman Michael for Chief back Mr. Executive like Officer, and would closing remarks. Gross, to to

Michael Gross

remarks. closing No

questions. forward you talking to you look your to thank Just for And soon. again we all to

Operator

does this Thanks for conclude participation. conference your And today's call.

You may disconnect. now

Michael Gross	Chairman, President & CEO
Richard Peteka	Treasurer, Secretary & CFO
Bruce Spohler	COO
Robert Dodd	Raymond James & Associates
Mickey Schleien	Ladenburg Thalmann & Co.
Owen Lau	Oppenheimer
Paul Johnson	KBW

SLR Investment (SLRC) 8 May 192019 Q1 Earnings call transcript