PennantPark Floating Rate Capital Ltd. Announces Financial Results for the First Quarter Ended December 31, 2023
- Net asset value per share increased by 0.6% quarterly
- Net investment income was $19.4 million
- Weighted average yield on debt investments at quarter-end was 12.5%
- The portfolio totaled $1,270.9 million as of December 31, 2023
- The company made investments in four new and 23 existing portfolio companies from December 31, 2023, through February 2, 2024
- Net unrealized depreciation of $19.6 million as of December 31, 2023
- Net increase in net assets resulting from operations was $(1.6) million for the three months ended December 31, 2022
- Increase in performance-based incentive fees as a result of higher pre-incentive fee net investment income
Insights
The reported financial results from PennantPark Floating Rate Capital Ltd. highlight a quarterly increase in both GAAP and adjusted net asset value per share by 0.6%, along with a net investment income of $19.4 million, or $0.33 per share. This performance indicates a stable growth trajectory for the company, which can be attributed to the active investment in core middle market loans and the performance of the PSSL joint venture. The weighted average yield on debt investments at quarter-end was 12.5%, reflecting the company's ability to generate income from its debt portfolio.
Investors may find the company's low non-accrual rates, at 0.1% of the overall portfolio on a cost basis, reassuring as it suggests minimal default risk. The increase in the investment portfolio from $1,067.2 million to $1,270.9 million quarter-over-quarter demonstrates a significant expansion of the company's asset base. However, attention should be given to the net unrealized depreciation of $19.6 million, which could indicate potential valuation adjustments or market fluctuations affecting the portfolio's fair value.
PennantPark's focus on variable-rate investments, which constitute approximately 100% of its debt portfolio, positions the company to potentially benefit from rising interest rates. Variable-rate instruments can provide a hedge against inflation, as the interest income from these investments increases with the underlying benchmark rates. This strategy is particularly relevant given the current economic climate characterized by inflationary pressures and the Federal Reserve's interest rate hikes.
The diversification across 141 companies with an average investment size of $9.0 million could mitigate risk and provide stability to earnings. However, the market will be closely monitoring the impact of macroeconomic factors on the performance of these portfolio companies, as any significant downturn could affect the company's financials and the overall health of the investment portfolio.
From a regulatory perspective, PennantPark's debt to equity ratio of 1.03x falls within the typical range for business development companies (BDCs), which are generally allowed to operate with a maximum debt-to-equity ratio of 2:1, as per regulations under the Investment Company Act of 1940. This ratio is important for investors as it provides insight into the company's leverage level and financial stability. The company's adherence to GAAP and presentation of non-GAAP measures such as adjusted net asset value per share and core net investment income also demonstrate transparency in financial reporting, which is crucial for maintaining investor confidence.
MIAMI, Feb. 07, 2024 (GLOBE NEWSWIRE) -- PennantPark Floating Rate Capital Ltd. (NYSE: PFLT) (TASE: PFLT) announced today its financial results for the first quarter ended December 31, 2023.
HIGHLIGHTS
Quarter ended December 31, 2023 (Unaudited)
($ 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 |
| (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 |
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
As of September 30, 2023, our portfolio totaled
For the three months ended December 31, 2023, we invested
PennantPark Senior Secured Loan Fund I LLC
As of December 31, 2023, PSSL’s portfolio totaled
For the three months ended December 31, 2023, PSSL invested
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
Expenses
For the three months and year ended December 31, 2023, expenses totaled
Net Investment Income
For the three months ended December 31, 2023 and 2022, net investment income totaled
Net Realized Gains or Losses
For the three months ended December 31, 2023 and 2022, net realized gains (losses) totaled
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
For the three months ended December 31, 2023 and 2022, the Credit Facility and the Company's
Net Increase (Decrease) in Net Assets Resulting from Operations
For the three months ended December 31, 2023 and 2022, net increase (decrease) in net assets resulting from operations totaled
LIQUIDITY AND CAPITAL RESOURCES
Our liquidity and capital resources are derived primarily from cash flows from operations, including income earned, proceeds from investment sales and repayments, and proceeds of securities offerings and debt financings. Our primary use of funds from operations includes investments in portfolio companies and payments of fees and other operating expenses we incur. We have used, and expect to continue to use, our debt capital, proceeds from our portfolio and proceeds from public and private offerings of securities to finance our investment objectives and operations.
As of December 31, 2023 and September 30, 2023, we had
As of December 31, 2023 and September 30, 2023, we had cash equivalents of
For the three months ended December 31, 2023, our operating activities used cash of
For the three months ended December 31,2022, our operating activities provided cash of
DISTRIBUTIONS
During the three months ended December 31, 2023 and 2022, we declared distributions of
RECENT DEVELOPMENTS
For the period subsequent to December 31, 2023 through February 2, 2024, we invested
AVAILABLE INFORMATION
The Company makes available on its website its Quarterly Report on Form 10-Q filed with the SEC, and stockholders may find such report on its website at www.pennantpark.com.
| PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (in thousands, except per share data) (Unaudited) | ||||||||
| December 31, 2023 | September 30, 2023 | |||||||
| Assets | ||||||||
| Investments at fair value | ||||||||
| Non-controlled, non-affiliated investments (amortized cost— | $ | 974,595 | $ | 772,178 | ||||
| Controlled, affiliated investments (amortized cost— | 296,332 | 294,996 | ||||||
| Total investments (amortized cost— | 1,270,927 | 1,067,174 | ||||||
| Cash and cash equivalents (cost— | 75,826 | 100,555 | ||||||
| Interest receivable | 11,636 | 10,423 | ||||||
| Distributions receivable | 508 | 565 | ||||||
| Due from affiliate | 142 | — | ||||||
| Prepaid expenses and other assets | 20 | 894 | ||||||
| Total assets | 1,359,059 | 1,179,611 | ||||||
| Liabilities | ||||||||
| Credit Facility payable, at fair value (cost— | 260,917 | 9,400 | ||||||
| 2031 Asset-Backed Debt, net (par— | 226,917 | 226,759 | ||||||
| 2026 Notes payable, net (par— | 183,248 | 183,054 | ||||||
| Interest payable on debt | 6,520 | 8,615 | ||||||
| Distributions payable | 6,020 | 6,020 | ||||||
| Payable for investments purchased | 5,578 | 4,905 | ||||||
| Incentive fee payable | 4,863 | 4,628 | ||||||
| Base management fee payable | 2,951 | 2,759 | ||||||
| Deferred tax liability | 1,794 | 1,794 | ||||||
| Accounts payable and accrued expenses | 1,746 | 1,287 | ||||||
| Due to affiliates | 492 | 566 | ||||||
| 2023 Notes payable, at fair value (par— | — | 76,219 | ||||||
| Total liabilities | 701,046 | 526,006 | ||||||
| Commitments and contingencies | ||||||||
| Net assets | ||||||||
| Common stock, 58,734,702 and 58,734,702 shares issued and outstanding, respectively Par value | 59 | 59 | ||||||
| Paid-in capital in excess of par value | 765,187 | 765,187 | ||||||
| Accumulated deficit | (107,233 | ) | (111,641 | ) | ||||
| Total net assets | $ | 658,013 | $ | 653,605 | ||||
| Total liabilities and net assets | $ | 1,359,059 | $ | 1,179,611 | ||||
| Net asset value per share | $ | 11.20 | $ | 11.13 | ||||
| PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (Unaudited) | ||||||||
| Three Months Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Investment income: | ||||||||
| From non-controlled, non-affiliated investments: | ||||||||
| Interest | $ | 23,768 | $ | 20,735 | ||||
| Dividend | 508 | 577 | ||||||
| Other income | 1,763 | 142 | ||||||
| From controlled, affiliated investments: | ||||||||
| Interest | 8,434 | 6,909 | ||||||
| Dividend | 3,500 | 2,975 | ||||||
| Total investment income | 37,973 | 31,338 | ||||||
| Expenses: | ||||||||
| Interest and expenses on debt | 8,942 | 9,858 | ||||||
| Performance-based incentive fee | 4,863 | 3,433 | ||||||
| Base management fee | 2,951 | 2,931 | ||||||
| General and administrative expenses | 988 | 706 | ||||||
| Administrative services expenses | 626 | 144 | ||||||
| Expenses before provision for taxes | 18,370 | 17,072 | ||||||
| Provision for taxes on net investment income | 154 | 534 | ||||||
| Total expenses | 18,524 | 17,606 | ||||||
| Net investment income | 19,449 | 13,732 | ||||||
| Realized and unrealized gain (loss) on investments and debt: | ||||||||
| Net realized gain (loss) on: | ||||||||
| Non-controlled, non-affiliated investments | (3,089 | ) | 63 | |||||
| Non-controlled and controlled, affiliated investments | — | — | ||||||
| Net realized gain (loss) on investments | (3,089 | ) | 63 | |||||
| Net change in unrealized appreciation (depreciation) on: | ||||||||
| Non-controlled, non-affiliated investments | 5,228 | (12,693 | ) | |||||
| Controlled and non-controlled, affiliated investments | 943 | (4,064 | ) | |||||
| Provision for taxes on unrealized appreciation (depreciation) on investments | — | (725 | ) | |||||
| Debt (appreciation) depreciation | (62 | ) | 2,067 | |||||
| Net change in unrealized appreciation (depreciation) on investments and debt | 6,109 | (15,415 | ) | |||||
| Net realized and unrealized gain (loss) from investments and debt | 3,020 | (15,352 | ) | |||||
| Net increase (decrease) in net assets resulting from operations | $ | 22,469 | $ | (1,620 | ) | |||
| Net increase (decrease) in net assets resulting from operations per common share | $ | 0.38 | $ | (0.04 | ) | |||
| Net investment income per common share | $ | 0.33 | $ | 0.30 | ||||
ABOUT PENNANTPARK FLOATING RATE CAPITAL LTD.
PennantPark Floating Rate Capital Ltd. is a business development company which primarily invests in U.S. middle-market companies in the form of floating rate senior secured loans, including first lien secured debt, second lien secured debt and subordinated debt. From time to time, the Company may also invest in equity investments. PennantPark Floating Rate Capital Ltd. is managed by PennantPark Investment Advisers, LLC.
ABOUT PENNANTPARK INVESTMENT ADVISERS, LLC
PennantPark Investment Advisers, LLC is a leading middle-market credit platform, managing
FORWARD-LOOKING STATEMENTS AND OTHER
This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports we file under the Exchange Act. All statements other than statements of historical facts included in this press release are forward-looking statements and are not guarantees of future performance or results, and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the Securities and Exchange Commission. PennantPark Floating Rate Capital Ltd. undertakes no duty to update any forward-looking statement made herein. You should not place undue influence on such forward-looking statements as such statements speak only as of the date on which they are made.
We may use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations.
The information contained herein is based on current tax laws, which may change in the future. The Company cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. The information provided in this material does not constitute any specific legal, tax or accounting advice. Please consult with qualified professionals for this type of advice.
| CONTACT: | Richard T. Allorto, Jr. |
| PennantPark Floating Rate Capital Ltd. | |
| (212) 905-1000 | |
| www.pennantpark.com |
FAQ
What was PennantPark Floating Rate Capital Ltd.'s net asset value per share as of December 31, 2023?
What was the net investment income for the first quarter ended December 31, 2023?
What was the weighted average yield on debt investments at quarter-end?
How much did the company invest in new and existing portfolio companies from December 31, 2023, through February 2, 2024?
What was the net unrealized depreciation as of December 31, 2023?
What was the net increase in net assets resulting from operations for the three months ended December 31, 2022?
