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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Q & A
Operator
Operator

Thank you. (Operator Instructions) Our first question comes from Mickey Schleien with Ladenburg. Your line is now open.

Analyst
Mickey Schleien

Yes. Good morning everyone. Michael, I think in the call you mentioned you've seen some deceleration in revenue and EBITDA growth in the portfolio. So, I'd just like to ask about Trident. I know it's a small position, but it'd be helpful to understand what issues it's been facing that caused it to file for bankruptcy? And does that have anything to do with cyclicality?

Executive
Bruce Spohler

Sure. Mickey, I'll take that one. Actually, Michael's comment, just to clarify for a moment, was not any trends that we're seeing in terms of the fundamentals of our portfolio, where we continue to see strong revenue on EBITDA growth in the mid to high-single digits. It's just actually as we look more broadly at some of the investments that we're looking at, opportunities we're looking at, we do see a little bit less in terms of tailwinds and growth, but our portfolio remains to be fundamentally strong.

As -- related to Trident specifically, Trident is a health care provider in the mobile diagnostics business. To your point, it is a small position for us, but we treat every position as if it's our only position. And so we have been working this one. We've been an investor for a few years early on. We actually were a second lien lender a number of years ago. And in the health care sector, they're not facing anything that is systematic to either the economy or the health care sector. They just have had some headwinds in terms of what's going on at home health and some of the competitive dynamics there as well as some billing and collection issues, which we have seen from time to time in some of these healthcare rollouts.

So it's very specific to Trident. And is not in any way an indication of what's going on either in our portfolio, the economy or healthcare sector more broadly. And that's further supported by our relatively low watch list, as you look at the 3%, 3.5% watch list level at SUNS.

Analyst
Mickey Schleien

Thank you for that, Bruce. That's really helpful. And just one other question. In the Solar call, you mentioned that at Solar, some of the non-cash flow lending businesses were looking at a broader opportunity set. And I noticed that at North Mill, the weighted average yield in the portfolio declined very meaningfully from the fourth quarter to the first quarter. Was that for the same reason or was there something non-recurring in the fourth quarter North Mill?

Executive
Bruce Spohler

Yes. That's a great question. Totally unrelated to our solar comments, North Mill had a couple of higher yielding investments that repaid. So, that was just a one-off situation. They continue to see some very attractive opportunities. Pipeline is actually strong. We have been looking at a variety of ways to grow that portfolio, either through acquisitions of either portfolios or businesses. We like factoring a fair