MIAMI, Feb. 07, 2024 (GLOBE NEWSWIRE) — PennantPark Floating Rate Capital Ltd. (NYSE:PFLT) (TASE: PFLT) announced today its financial results for the first quarter ended December 31, 2023.
HIGHLIGHTS
Quarter ended December 31, 2023 (Unaudited)
($ in millions, except per share amounts)
Assets and Liabilities:
Investment portfolio (1)
$
1,270.9
Net assets
$
658.0
GAAP net asset value per share
$
11.20
Quarterly increase in GAAP net asset value per share
0.6
%
Adjusted net asset value per share (2)
$
11.20
Quarterly increase in adjusted net asset value per share (2)
0.6
%
Credit Facility
$
260.9
2026 Notes
$
183.2
2031 Asset-Backed Debt
$
226.9
Regulatory debt to equity
1.03x
Weighted average yield on debt investments at quarter-end
12.5
%
Operating Results:
Net investment income
$
19.4
Net investment income per share (GAAP)
$
0.33
Core net investment income per share (3)
$
0.33
Distributions declared per share
$
0.31
Portfolio Activity:
Purchases of investments
$
302.6
Sales and repayments of investments
$
103.8
PSSL Portfolio data:
PSSL investment portfolio
$
836.9
Purchases of investments
$
75.7
Sales and repayments of investments
$
27.7
_____________________________
(1)
Includes investments in PennantPark Senior Secured Loan Fund I LLC, or PSSL, an unconsolidated joint venture, totaling $262.2 million, at fair value.
(2)
This is a non-GAAP financial measure. The Company believes that this number provides useful information to investors and management because it reflects the Company’s financial performance excluding the impact of the unrealized amounts on the Company’s multi-currency senior secured revolving credit facility with Truist Bank and the other lenders (the “Credit Facility”). The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.
(3)
Core net investment income (“Core NII”) is a non-GAAP financial measure. The Company believes that Core NII provides useful information to investors and management because it reflects the Company’s financial performance excluding one-time or non-recurring investment income and expenses. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. For the quarter ended December 31, 2023, there were no one-time events resulting in $0.33 of Core NII.
CONFERENCE CALL AT 9:00 A.M. ET ON FEBRUARY 8, 2024
The Company will also host a conference call at 9:00 a.m. (Eastern Time) on Thursday February 8, 2024 to discuss its financial results. All interested parties are welcome to participate. You can access the conference call by dialing toll-free (888) 204-4368 approximately 5-10 minutes prior to the call. International callers should dial (646) 828-8193. All callers should reference conference ID #3575703 or PennantPark Floating Rate Capital Ltd. An archived replay will also be available on a webcast link located on the Quarterly Earnings page in the Investor section of PennantPark’s website.
PORTFOLIO AND INVESTMENT ACTIVITY
“We are pleased to have another quarter of solid performance from both a NAV and net investment income perspective. We are actively investing in this excellent vintage of new core middle market loans,” said Art Penn, Chairman and CEO. “Through the growing balance sheets of PFLT and our PSSL joint venture, we are driving meaningfully increased income.”
As of December 31, 2023, our portfolio totaled $1,270.9 million, and consisted of $1,090.5 million of first lien secured debt (including $210.1 million in PSSL), $0.2 million of second lien secured debt and $180.3 million of preferred and common equity (including $52.1 million in PSSL). Our debt portfolio consisted of approximately 100% variable-rate investments. As of December 31, 2023, we had one portfolio company on non-accrual, representing 0.1% and zero percent of our overall portfolio on a cost and fair value basis, respectively. As of December 31, 2023, the portfolio had net unrealized depreciation of $19.6 million. Our overall portfolio consisted of 141 companies with an average investment size of $9.0 million and had a weighted average yield on debt investments of 12.5%.
As of September 30, 2023, our portfolio totaled $1,067.2 million and consisted of $906.2 million of first lien secured debt (including $210.1 million in PSSL), $0.1 million of second lien secured debt and $160.9 million of preferred and common equity (including $50.9 million in PSSL). Our debt portfolio consisted of approximately 100% variable-rate investments. As of September 30, 2023, we had three portfolio companies on non-accrual, representing 0.9% and 0.2% of our overall portfolio on a cost and fair value basis, respectively. As of September 30, 2023, the portfolio had net unrealized depreciation of $25.7 million. Our overall portfolio consisted of 131 companies with an average investment size of $8.1 million, had a weighted average yield on debt investments of 12.6%.
For the three months ended December 31, 2023, we invested $302.6 million in 13 new and 34 existing portfolio companies at a weighted average yield on debt investments of 11.9%. Sales and repayments of investments for the same period totaled $103.8 million. For the three months ended December 31, 2022, we invested $65.6 million in four new and 29 existing portfolio companies with a weighted average yield on debt investments of 11.2%. Sales and repayments of investments for the same period totaled $63.0 million.
PennantPark Senior Secured Loan Fund I LLC
As of December 31, 2023, PSSL’s portfolio totaled $836.9 million, consisted of 106 companies with an average investment size of $7.9 million and had a weighted average yield on debt investments of 12.1%. As of September 30, 2023, PSSL’s portfolio totaled $785.9 million, consisted of 105 companies with an average investment size of $7.5 million and had a weighted average yield on debt investments of 12.1%.
For the three months ended December 31, 2023, PSSL invested $75.7 million (including $62.7 million purchase from the Company) in four new and nine existing portfolio companies with a weighted average yield on debt investments of 12.3%. PSSL’s sales and repayments of investments for the same period totaled $27.7 million. For the three months ended December 31, 2022, PSSL invested $29.5 million (including $18.8 million purchased from the Company) in seven new and eight existing portfolio companies with a weighted average yield on debt investments of 11.1%. PSSL’s sales and repayments of investments for the same period totaled $28.8 million.
RESULTS OF OPERATIONS
Set forth below are the results of operations for the three months ended December 31, 2023 and 2022.
Investment Income
For the three months ended December 31, 2023, investment income was $38.0 million, which was attributable to $33.2 million from first lien secured debt and $4.8 million from other investments. For the three months ended December 31, 2022, investment income was $31.3 million, which was attributable to $27.6 million from first lien secured debt and $3.7 million from other investments. The increase in investment income compared to the same period in the prior year was primarily due to the increase in the cost yield of our debt portfolio.
Expenses
For the three months and year ended December 31, 2023, expenses totaled $18.5 million and were comprised of: $8.9 million of debt related interest and expenses, $3.0 million of base management fees, $4.9 million of performance-based incentive fees, $1.6 million of general and administrative expenses and $0.2 million of taxes. For the three months ended December 31, 2022, expenses totaled $17.6 million and were comprised of: $9.9 million of debt related interest and expenses, $2.9 million of base management fees, $3.4 million of performance-based incentive fees, $0.8 million of general and administrative expenses and $0.5 million of taxes. The increase in expenses compared to the same period in the prior year was primarily due to the increase in performance-based incentive fees as a result of higher pre-incentive fee net investment income.
Net Investment Income
For the three months ended December 31, 2023 and 2022, net investment income totaled $19.4 million or $0.33 per share, and $13.7 million or $0.30 per share, respectively. The increase in net investment income was primarily due to an increase in investment income partially offset by an increase in expenses compared to the same period in the prior year.
Net Realized Gains or Losses
For the three months ended December 31, 2023 and 2022, net realized gains (losses) totaled $(3.1) million and less than $0.1 million, respectively. The change in net realized gains (losses) compared to the same period in the prior year was primarily due to changes in the market conditions of our investments and the values at which they were realized.
Unrealized Appreciation or Depreciation on Investments, the Credit Facility and the 2023 Notes
For the three months ended December 31, 2023 and 2022, we reported net change in unrealized appreciation (depreciation) on investments of $6.2 million and $(16.8) million, respectively. As of December 31, 2023 and September 30, 2023, our net unrealized appreciation (depreciation) on investments totaled $(19.6) million and $(25.7) million, respectively. The net change in unrealized appreciation (depreciation) on our investments compared to the same period in the prior year was primarily due to the operating performance of the portfolio companies within our portfolio and changes in the capital market conditions of our investments.
For the three months ended December 31, 2023 and 2022, the Credit Facility and the Company’s 4.3% Series A notes due 2023 (the “2023 Notes”) had a net change in unrealized appreciation (depreciation) of less than $0.1 million and $(2.1) million, respectively. …
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