PennantPark Investment Corporation Announces Financial Results for the Quarter Ended December 31, 2023
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Insights
The reported financial results from PennantPark Investment Corporation (PNNT) for the first quarter ending December 31, 2023, indicate a stable operational performance, with net investment income of $15.7 million or $0.24 per share. This figure surpasses the declared distributions of $0.21 per share, suggesting a solid coverage ratio and financial health for the company. The portfolio's composition, with a significant portion in first lien secured debt (56%), reflects a conservative risk profile, potentially attractive to risk-averse investors. The weighted average yield on debt investments at 12.6% is notably high, which could be indicative of the risk premium associated with the company's investments or a reflection of the current interest rate environment.
Furthermore, the slight decrease in GAAP and adjusted net asset value per share by 0.6% could be a point of concern for investors, as it might signal valuation adjustments or capital losses in the portfolio. However, the one portfolio company on non-accrual status, representing 1.0% of the overall portfolio on a cost basis, is relatively low and may not be a significant drag on performance. The increase in investment income year-over-year, driven by the cost yield of the debt portfolio, suggests effective portfolio management and a favorable interest rate environment for the company's investment strategy.
PennantPark's strategic focus on variable-rate investments, which constitute 96% of their debt portfolio, positions the company to potentially benefit from rising interest rates, as reflected in the 12.6% weighted average yield. This approach, however, also exposes the portfolio to interest rate risk, which could impact the value of these investments if rates were to decrease. The net unrealized depreciation of $(21.3) million could be a reflection of market volatility or credit events impacting the valuation of their investments.
From a market perspective, the company's performance should be evaluated in the context of broader economic conditions, including the interest rate environment and credit market dynamics. Investors may find PennantPark's results reassuring, as the company has demonstrated an ability to generate income that supports its distributions. However, it's important to monitor the credit quality of the investments and the potential impact of economic downturns on their performance.
It's pertinent to note that PennantPark's financial statements include non-GAAP measures such as adjusted net asset value per share and core net investment income per share. While these measures can provide additional insights into the company's performance, they are not standardized and may not be directly comparable to similar measures reported by other companies. Investors should consider these measures in conjunction with GAAP results to gain a comprehensive understanding of the company's financial health.
In terms of regulatory compliance, the company's regulatory debt to equity ratio of 1.41x is within typical bounds for business development companies (BDCs), which are generally regulated to maintain a debt to equity ratio below 2:1. This suggests that PennantPark is managing leverage in a manner consistent with regulatory requirements and industry norms, which can be a positive signal for investors concerned with financial stability and regulatory risk.
MIAMI, Feb. 07, 2024 (GLOBE NEWSWIRE) -- PennantPark Investment Corporation (NYSE: PNNT) announced today its financial results for the first quarter ended December 31, 2023.
HIGHLIGHTS
Quarter ended December 31, 2023 (unaudited)
($ in millions, except per share amounts)
Assets and Liabilities: | ||||
Investment portfolio (1) | $ | 1,210.8 | ||
Net assets | $ | 499.1 | ||
GAAP net asset value per share | $ | 7.65 | ||
Quarterly decrease in GAAP net asset value per share | (0.6 | )% | ||
Adjusted net asset value per share (2) | $ | 7.65 | ||
Quarterly decrease in adjusted net asset value per share (2) | (0.6 | )% | ||
Credit Facility | $ | 385.0 | ||
2026 Notes | $ | 147.9 | ||
2026-2 Notes | $ | 162.4 | ||
Regulatory debt to equity | 1.41x | |||
Weighted average yield on debt investments | 12.6 | % | ||
Operating Results: | ||||
Net investment income | $ | 15.7 | ||
Net investment income per share | $ | 0.24 | ||
Core net investment income per share (3) | $ | 0.24 | ||
Distributions declared per share | $ | 0.21 | ||
Portfolio Activity: | ||||
Purchases of investments* | $ | 231.1 | ||
Sales and repayments of investments* | $ | 71.0 | ||
PSLF Portfolio data: | ||||
PSLF investment portfolio | $ | 857.9 | ||
Purchases of investments | $ | 81.0 | ||
Sales and repayments of investments | $ | 29.1 |
_____________________
* excludes U.S. Government Securities
- Includes investments in PennantPark Senior Loan Fund, LLC ("PSLF"), an unconsolidated joint venture, totaling
$165.1 million , at fair value. - 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 unrealized gain on the Company's multi-currency, senior secured revolving credit facility with Truist Bank, as amended, 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.
- 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
$0.24 of Core NII.
CONFERENCE CALL AT 12:00 P.M. EST ON FEBRUARY 8, 2024
PennantPark Investment Corporation (“we,” “our,” “us” or the “Company”) will also host a conference call at 12:00 p.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) 394-8218 approximately 5-10 minutes prior to the call. International callers should dial (646) 828-8193. All callers should reference conference ID #2627395 or PennantPark Investment Corporation. 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 announce another quarter of solid net investment income, which is in excess of our dividend by a healthy margin,” said Arthur Penn, Chairman and CEO. “Our earnings stream continues to be robust and is driven in part by the excellent returns generated by our PSLF Joint Venture."
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
For the three months ended December 31, 2022, we invested
PennantPark Senior Loan Fund, LLC
As of December 31, 2023, PSLF’s portfolio totaled
As of September 30, 2023, PSLF’s portfolio totaled
For the three months ended December 31, 2023, PSLF invested
For the three months ended December 31, 2022, PSLF invested
RESULTS OF OPERATIONS
Set forth below are the results of operations during 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 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 and Debt
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 Truist Credit Facility had a net change in unrealized (appreciation) depreciation of
Net Change 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 interest expense, fees and other operating expenses we incur. We have used, and expect to continue to use, our debt capital, proceeds from of 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 and 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 used cash of
DISTRIBUTIONS
During the three months ended December 31, 2023, we declared distributions of
AVAILABLE INFORMATION
The Company makes available on its website its Quarterly report on Form 10-Q filed with the SEC and stockholders may find the report on our website at www.pennantpark.com.
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES | ||||||||
(In thousands, except share data) | ||||||||
December 31, 2023 | September 30, 2023 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Investments at fair value | ||||||||
Non-controlled, non-affiliated investments (amortized cost— | $ | 879,245 | $ | 830,808 | ||||
Non-controlled, affiliated investments (amortized cost— | 40,829 | 54,771 | ||||||
Controlled, affiliated investments (amortized cost— | 290,684 | 216,068 | ||||||
Total investments (amortized cost— | 1,210,758 | 1,101,647 | ||||||
Cash and cash equivalents (cost— | 36,893 | 38,775 | ||||||
Interest receivable | 9,884 | 6,820 | ||||||
Distribution receivable | 5,381 | 5,079 | ||||||
Due from affiliates | 181 | — | ||||||
Prepaid expenses and other assets | 4,141 | 4,656 | ||||||
Total assets | 1,267,238 | 1,156,977 | ||||||
Liabilities | ||||||||
Truist Credit Facility payable, at fair value (cost— | 385,016 | 206,940 | ||||||
2026 Notes payable, net (par— | 147,894 | 147,669 | ||||||
2026 Notes-2 payable, net (par— | 162,440 | 162,226 | ||||||
Payable for investment purchased | 51,850 | 99,949 | ||||||
Distributions payable | 4,566 | 13,697 | ||||||
Accounts payable and accrued expenses | 4,323 | 6,754 | ||||||
Base management fee payable | 4,004 | 3,915 | ||||||
Incentive fee payable | 3,321 | 3,310 | ||||||
Interest payable on debt | 3,125 | 6,231 | ||||||
Due to affiliates | 1,557 | 4,099 | ||||||
Total liabilities | 768,096 | 654,790 | ||||||
Commitments and contingencies | ||||||||
Net assets | ||||||||
Common stock, 65,224,500 shares issued and outstanding Par value | 65 | 65 | ||||||
Paid-in capital in excess of par value | 746,466 | 746,466 | ||||||
Accumulated deficit | (247,389 | ) | (244,344 | ) | ||||
Total net assets | $ | 499,142 | $ | 502,187 | ||||
Total liabilities and net assets | $ | 1,267,238 | $ | 1,156,977 | ||||
Net asset value per share | $ | 7.65 | $ | 7.70 |
PENNANTPARK INVESTMENT CORPORATION AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(In thousands, except share data) | ||||||||
Three Months Ended December 31, (Unaudited) | ||||||||
2023 | 2022 | |||||||
Investment income: | ||||||||
From non-controlled, non-affiliated investments: | ||||||||
Interest | $ | 21,068 | $ | 22,231 | ||||
Payment-in-kind | 2 | — | ||||||
Dividend income | 692 | — | ||||||
Other income | 1,425 | 487 | ||||||
From non-controlled, affiliated investments: | ||||||||
Payment-in-kind | 347 | — | ||||||
From controlled, affiliated investments: | ||||||||
Interest | 5,481 | 2,858 | ||||||
Payment-in-kind | 632 | 1,131 | ||||||
Dividend income | 4,689 | 3,256 | ||||||
Total investment income | 34,336 | 29,963 | ||||||
Expenses: | ||||||||
Interest and expenses on debt | 9,557 | 9,729 | ||||||
Base management fee | 4,004 | 4,602 | ||||||
Incentive fee | 3,321 | 2,192 | ||||||
General and administrative expenses | 1,214 | 841 | ||||||
Administrative services expenses | 189 | 266 | ||||||
Expenses before provision for taxes | 18,285 | 17,630 | ||||||
Provision for taxes on net investment income | 393 | 2,000 | ||||||
Net expenses | 18,678 | 19,630 | ||||||
Net investment income | 15,658 | 10,333 | ||||||
Realized and unrealized gain (loss) on investments and debt: | ||||||||
Net realized gain (loss) on investments and debt: | ||||||||
Non-controlled, non-affiliated investments | 2,581 | 4,064 | ||||||
Non-controlled and controlled, affiliated investments | (750 | ) | — | |||||
Net realized gain (loss) on investments and debt | 1,831 | 4,064 | ||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||
Non-controlled, non-affiliated investments | (12,270 | ) | (50,517 | ) | ||||
Non-controlled and controlled, affiliated investments | 7,324 | (41,048 | ) | |||||
Provision for taxes on unrealized appreciation (depreciation) on investments | 150 | 896 | ||||||
Debt appreciation (depreciation) | (2,040 | ) | 4,378 | |||||
Net change in unrealized appreciation (depreciation) on investments and debt | (6,836 | ) | (86,291 | ) | ||||
Net realized and unrealized gain (loss) from investments and debt | (5,005 | ) | (82,227 | ) | ||||
Net increase (decrease) in net assets resulting from operations | 10,653 | (71,894 | ) | |||||
Net increase (decrease) in net assets resulting from operations per common share | $ | 0.16 | $ | (1.10 | ) | |||
Net investment income per common share | $ | 0.24 | $ | 0.16 |
ABOUT PENNANTPARK INVESTMENT CORPORATION
PennantPark Investment Corporation, or the Company, is a business development company that invests primarily in U.S. middle-market companies in the form of first lien secured debt, second lien secured debt, subordinated debt and equity investments. PennantPark Investment Corporation 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
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 (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 PennantPark Investment Corporation files 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 SEC. PennantPark Investment Corporation 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 Investment Corporation | |
(212) 905-1000 | |
www.pennantpark.com |
FAQ
What is the quarterly decrease in GAAP net asset value per share for PennantPark Investment Corporation (PNNT)?
What was the net investment income for PennantPark Investment Corporation (PNNT) in the first quarter of 2023?
What was the total portfolio value of PennantPark Investment Corporation (PNNT) as of December 31, 2023?
What was the total PSLF investment portfolio value for PennantPark Investment Corporation (PNNT) as of December 31, 2023?