Solar Senior Capital Ltd. (NASDAQ:SUNS) Q1 2019 Earnings Conference Call - Final Transcript

May 07, 2019 • 11:00 am ET

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Solar Senior Capital Ltd. (NASDAQ:SUNS) Q1 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Bruce Spohler

to 35 borrowers with an average investment of $3.3 million. The weighted average asset-level yield for Gemino is was over 11.5%. During the first quarter, we funded just under $10 million of new investments and had repayments of approximately $3 million. For the quarter, Gemino paid a cash dividend up to SUNS of just under $1 million.

As Michael mentioned, the middle market cash flow lending environment remained frothy. We benefit from our diversified origination sources across cash flow and asset-based lending verticals, allowing us to allocate capital to investments that meet our strict underwriting criteria. In addition, we believe that the growth of the investment advisers platform will result in more investment opportunities across both cash flow and specialty finance asset classes for SUNS. Meantime, we will continue to be prudent and highly disciplined in deploying our substantial available capital.

Now let me turn the call back to Michael.

Executive
Michael Gross

Thank you, Bruce. Since the 2011 inception of SUNS, our investment decisions have consistently been focused on generating long-term stockholder value, while maintaining alignment with our shareholders. Importantly, we have been prudent in the face of sustained, frothy credit markets and remained disciplined, not compromising credit quality for yield. The result is a solid portfolio foundation from which to grow. We've always maintained an investment philosophy of assuming that we are late in the credit cycle, and we believe that in the current environment, it pays to be cautious.

We are confident our differentiated origination platform and diversified portfolio position us well to navigate in any environment. At approximately 0.8 times debt-to-equity, we are underlevered relative to our target range of 1.25 times to 1.5 times net debt-to-equity. We have substantial dry powder of $225 million to deploy via our differentiated investment verticals. If the credit cycle does shift, we believe our history of conservatism will enable us to outperform on a relative and absolute basis, and we will be well positioned to take advantage of market dislocations.

At last night's close of $17.19 per share, SUNS carries a yield of 8.2%, which represents a significant discount to the 5.8% implied yield of the S&P/LSTA Leveraged Loan 100 Index. Given the overall credit quality of SUNS' diversified portfolio, our differentiated origination engine and our disciplined investment philosophy, we believe SUNS represents an attractive investment on both a relative and absolute value basis. We thank you for the time this morning and look forward to speaking with you again next quarter. Operator, could you please open up the lines for questions?