Independent Private Credit Platform | Investing Since 2007 PennantPark Investment Corporation Investor Presentation – December 31, 2025 PennantPark at a Glance A Pioneer in Private Credit Founded in 2007 with a long-term track record through multiple cycles Over 800 credit and equity investments across the capital structure Target Cash-Flowing Companies We target profitable companies with leading market positions Emphasis on Capital Preservation Core Middle Market Focus We target mid-sized companies we beli ...

Core Viewpoint - During turbulent market conditions, investors are increasingly attracted to dividend-yielding stocks, which typically feature high free cash flows and substantial dividend payouts [1] Group 1: High-Yielding Stocks - PennantPark Investment Corp. (NYSE:PNNT) is identified as a high-yielding stock in the financial sector [2] - Horizon Technology Finance Corp (NASDAQ:HRZN) is also highlighted as a notable dividend-yielding stock [2] - Arbor Realty Trust Inc (NYSE:ABR) is mentioned as another key player in the high-yielding stock category [2]

Core Insights - The article emphasizes the importance of value investing as a strategy to identify strong stocks in various market conditions [2] - PennantPark Investment (PNNT) is highlighted as a stock to watch, currently holding a Zacks Rank of 2 (Buy) and a Value grade of A [3] Valuation Metrics - PNNT has a Price-to-Sales (P/S) ratio of 3.03, which is lower than the industry average of 3.27, indicating potential undervaluation [4] - The Price-to-Cash Flow (P/CF) ratio for PNNT is 8.84, compared to the industry average of 8.88, suggesting an attractive valuation based on cash flow [5] - Over the past 52 weeks, PNNT's P/CF has fluctuated between 8.42 and 10.22, with a median of 9.00, further supporting its valuation appeal [5] Investment Outlook - The combination of favorable valuation metrics and a strong earnings outlook positions PNNT as a compelling value stock at the moment [6]

Core Viewpoint - PennantPark Investment Corporation (PNNT) has experienced a continuous decline in share price, resulting in one of the highest dividend yields in the business development company (BDC) sector [1]. Group 1: Company Performance - The decline in PNNT's share price has led to an increased dividend yield, making it attractive for income-focused investors [1]. Group 2: Investment Strategy - The company exemplifies a hybrid investment strategy that combines classic dividend growth stocks with BDCs, REITs, and Closed End Funds to enhance investment income while achieving total returns comparable to traditional index funds like the S&P [1].

Financial Data and Key Metrics Changes - For the quarter ended December 31st, core net investment income was $0.14 per share, while GAAP net investment income was $0.11 per share [4][14] - The NAV as of December 31st was $7 per share, down 1.5% from $7.11 per share in the prior quarter [14] - The debt-to-equity ratio was 1.3x, with a diversified capital structure across multiple funding sources [14][15] Business Line Data and Key Metrics Changes - The company fully exited its equity investment in JF Holdings, receiving total proceeds of $68 million and generating a realized gain of $63 million [5] - The portfolio totaled $1.2 billion, with $115 million invested in three new and 51 existing portfolio companies during the quarter [11] - The joint venture (JV) portfolio totaled $1.4 billion, with an average net investment income yield of 16.4% over the last 12 months [12] Market Data and Key Metrics Changes - The median leverage across the portfolio was 4.5 times, with median interest coverage of 2.1 times [7][15] - The pricing on high-quality first-lien term loans remains attractive, typically ranging from SOFR plus 475-525 basis points [7] - The company originated three new platform investments with a median debt-to-EBITDA of 4x and interest coverage of 2.9x [8] Company Strategy and Development Direction - The company aims to reduce total equity exposure and focus on generating current income-producing investments [6][11] - The strategy includes maintaining a disciplined underwriting approach and focusing on core middle-market companies [10][11] - The company is positioned to benefit from increased M&A activity in the private middle market, particularly in sectors like military, defense, and healthcare [6][28] Management's Comments on Operating Environment and Future Outlook - Management noted that the current environment favors lenders with strong private equity sponsor relationships and disciplined underwriting [6] - The company remains committed to capital preservation and delivering compelling risk-adjusted returns through stable income generation [12][16] - Management expressed optimism about the ongoing M&A activity and its potential to drive repayments of existing portfolio investments [6][28] Other Important Information - The company anticipates maintaining the supplemental dividend payment through December 2026, supported by $41 million of undistributed spillover income [5] - The portfolio remains highly diversified with 158 companies across 37 different industries [15] Q&A Session Summary Question: Clarification on the supplemental dividend - Management confirmed that the $0.04 supplemental monthly dividend will remain in place through December 2026 [18][19] Question: One-time expenses related to new bond issuance - Management stated there will be no one-time expenses related to the new debt issuance, as fees will be capitalized and amortized [20][21] Question: AI as a risk or opportunity for borrowers - Management indicated that AI could present both risks and opportunities, emphasizing the importance of investing in companies with strong customer relationships and defensible market positions [22][24] Question: Potential for additional meaningful exits in equity rotation - Management remains optimistic about M&A activity and believes there are still opportunities for meaningful exits [28] Question: Dividend income decline related to the senior loan fund - Management confirmed that the decline in dividend income was related to the PSLF [52] Question: Trading coupon for stronger covenants - Management stated that covenants are a given in their part of the market, and they prioritize credit quality over yield [53]

Financial Data and Key Metrics Changes - For the quarter ended December 31st, core net investment income was $0.14 per share, while GAAP net investment income was $0.11 per share [4][14] - The total dividend will remain at $0.08 per share, consisting of a $0.04 base dividend and a $0.04 supplemental dividend, supported by $41 million of undistributed spillover income [4][5] - As of December 31st, the NAV was $7 per share, down 1.5% from $7.11 per share in the prior quarter [14] Business Line Data and Key Metrics Changes - The company fully exited its equity investment in JF Holdings, receiving total proceeds of $68 million and generating a realized gain of $63 million [5] - The portfolio totaled $1.2 billion, with $115 million invested in three new and 51 existing portfolio companies during the quarter [11] - The joint venture (JV) portfolio totaled $1.4 billion, with an average NII yield on invested capital in the JV of 16.4% [12] Market Data and Key Metrics Changes - The median leverage across the portfolio was 4.5x, with median interest coverage of 2.1x [7][15] - The pricing on high-quality first-lien term loans remains attractive, typically ranging from SOFR plus 475-525 basis points [7] - The company originated three new platform investments with a median debt-to-EBITDA of 4x and interest coverage of 2.9x [8] Company Strategy and Development Direction - The company is focused on reducing total equity exposure and monetizing investments, with a strategy to rotate capital into new income-producing investments [6][11] - The current market environment is favorable for lenders with strong private equity sponsor relationships and disciplined underwriting, where the company has a competitive advantage [7] - The company aims to deliver compelling risk-adjusted returns through stable income generation and long-term capital preservation [12][13] Management's Comments on Operating Environment and Future Outlook - Management noted an increase in M&A transaction activity across the private middle market, expanding the pipeline of new investment opportunities [6] - The company remains committed to capital preservation and a disciplined investment approach, with a focus on finding investment opportunities in growing middle market companies [12][13] - Management expressed confidence in the resilience of their portfolio and the ability to navigate through market chaos, leveraging past experiences [36][38] Other Important Information - The company has a diversified capital structure across multiple funding sources, including both secured and unsecured debt [14][15] - The debt-to-equity ratio was 1.3x as of December 31st [14] Q&A Session Summary Question: Clarification on the supplemental dividend - Management confirmed that the $0.04 supplemental dividend will remain in place through December 2026 [18][19] Question: One-time expenses related to new bond issuance - Management stated there will be no one-time expenses related to the new debt issuance, as fees will be capitalized and amortized [20] Question: AI as a risk or opportunity for borrowers - Management indicated that AI could present both risks and opportunities, emphasizing the importance of investing in companies with strong customer relationships and defensible market positions [22][24] Question: Potential for additional meaningful exits in equity rotation - Management remains optimistic about M&A activity and believes there are still opportunities for meaningful exits [28] Question: Dividend income decline related to the senior loan fund - Management confirmed that the decline in dividend income was related to the PSLF [52] Question: Trading coupon for stronger covenants - Management stated that covenants are a given in their part of the market, and they prioritize credit quality over yield [53]

Financial Data and Key Metrics Changes - For the quarter ended December 31st, core net investment income was $0.14 per share, while GAAP net investment income was $0.11 per share [5][14] - The NAV as of December 31st was $7 per share, down 1.5% from $7.11 per share in the prior quarter [15] - The debt-to-equity ratio was reported at 1.3x [15] Business Line Data and Key Metrics Changes - The company fully exited its equity investment in JF Holdings, receiving total proceeds of $68 million and generating a realized gain of $63 million [6] - The portfolio totaled $1.2 billion, with $115 million invested in three new and 51 existing portfolio companies during the quarter [11] - The joint venture (JV) portfolio totaled $1.4 billion, with an average net investment income yield of 16.4% over the last 12 months [12] Market Data and Key Metrics Changes - The median leverage across the portfolio was 4.5 times, with median interest coverage of 2.1 times [7] - The weighted average yield on debt investments was 10.9%, with 89% of the debt portfolio being floating rate [16] Company Strategy and Development Direction - The company aims to reduce total equity exposure and focus on generating current income through new investments [6][11] - The current market environment is seeing an increase in M&A activity, which is expected to drive repayments of existing portfolio investments [7] - The company emphasizes maintaining strong private equity sponsor relationships and disciplined underwriting as competitive advantages [7] Management's Comments on Operating Environment and Future Outlook - Management noted that the current environment favors lenders with strong relationships and disciplined underwriting, which aligns with the company's strategy [7] - The company remains committed to capital preservation and delivering compelling risk-adjusted returns through stable income generation [12] - Management expressed optimism about the ongoing M&A activity in sectors like military, defense, and healthcare, which are expected to perform well [30] Other Important Information - The company plans to maintain the supplemental dividend of $0.04 per share through December 2026, supported by $41 million of undistributed spillover income [5][6] - The company has a rigorous underwriting process, with nearly all originated first-lien loans including meaningful covenant protections [10] Q&A Session Summary Question: Clarification on the supplemental dividend - Management confirmed that the $0.04 supplemental dividend will remain in place through December 2026 [20] Question: One-time expenses related to new bond issuance - Management stated there will be no one-time expenses related to the new debt issuance, as fees will be capitalized and amortized [21] Question: AI as a risk or opportunity for borrowers - Management indicated that AI could present both risks and opportunities, emphasizing the importance of investing in companies with strong customer relationships and defensible market positions [24][25] Question: Potential for additional meaningful exits in equity rotation - Management remains optimistic about M&A activity and believes there are still opportunities for exits in the current year [28][30] Question: Adjusting dividends and stock repurchase - Management explained the decision to maintain dividends over time to preserve credit ratings and manage leverage, while also considering stock buybacks [34][35] Question: Competitive landscape and cost of capital - Management acknowledged the competitive landscape and emphasized the importance of reducing equity exposure while managing the JV effectively [44][47]

分组1 - PennantPark reported quarterly earnings of $0.11 per share, missing the Zacks Consensus Estimate of $0.16 per share, and down from $0.20 per share a year ago, representing an earnings surprise of -32.64% [1] - The company posted revenues of $27.25 million for the quarter ended December 2025, missing the Zacks Consensus Estimate by 7.53%, and down from $34.21 million year-over-year [2] - PennantPark shares have underperformed the market, losing about 4.7% since the beginning of the year compared to the S&P 500's gain of 1.3% [3] 分组2 - The current consensus EPS estimate for the coming quarter is $0.16 on revenues of $27.99 million, and for the current fiscal year, it is $0.65 on revenues of $112.14 million [7] - The Zacks Industry Rank for Financial - SBIC & Commercial Industry is currently in the bottom 44% of over 250 Zacks industries, indicating potential challenges for stocks in this sector [8] - The estimate revisions trend for PennantPark was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, suggesting it is expected to outperform the market in the near future [6]

Portfolio Overview - As of December 31, 2025, the portfolio totaled $1,218.5 million, with 40% in first lien secured debt and a weighted average yield on interest-bearing debt investments of 10.9%[237] - For the three months ended December 31, 2025, the company invested $115.1 million in portfolio companies, with a weighted average yield on debt investments of 9.7%[239] - The company had four portfolio companies on non-accrual as of December 31, 2025, representing 2.2% of the overall portfolio on a cost basis[237] - As of September 30, 2025, the portfolio totaled $1,287.3 million, with 45% in first lien secured debt and a weighted average yield on interest-bearing debt investments of 11.0%[238] - The average investment size in the portfolio was $6.4 million as of December 31, 2025, excluding U.S. Government Securities[237] - PSLF's investment portfolio consisted of debt investments in 118 portfolio companies as of December 31, 2025, compared to 109 companies as of September 30, 2025[295] - Total investments increased to $1,357,342,000 as of December 31, 2025, up from $1,265,901,000 on September 30, 2025, representing a growth of approximately 7.2%[304] - The number of portfolio companies in PSLF rose to 118, compared to 109 in the previous quarter[304] Financial Performance - For the three months ended December 31, 2025, investment income was $27.3 million, a decrease from $34.2 million in the same period of 2024, primarily due to a decrease in total portfolio size and weighted average yield on debt investments[273] - Net investment income for the three months ended December 31, 2025, was $7.0 million, or $0.11 per share, compared to $13.0 million, or $0.20 per share, in 2024[275] - Total expenses for the three months ended December 31, 2025, were $20.3 million, down from $21.2 million in 2024, mainly due to a decrease in incentive fees[274] - Net realized gains for the three months ended December 31, 2025, totaled $59.0 million, compared to net losses of $(2.6) million in 2024, reflecting changes in market conditions[276] - The net change in unrealized depreciation on investments for the three months ended December 31, 2025, was $(57.1) million, compared to $2.4 million in 2024[277] - Net investment income for the three months ended December 31, 2025, was $7.7 million, a decrease from $9.3 million in the same period of 2024[315] - Total expenses for the three months ended December 31, 2025, were $25.1 million, compared to $24.2 million in the same period of 2024[315] Debt and Financing - The Truist Credit Facility had outstanding borrowings of $296.5 million as of December 31, 2025, with a weighted average interest rate of 5.8%[283] - The company incurred $3.9 million in expenses related to amendment costs on the Truist Credit Facility for the three months ended December 31, 2025[256] - The company has entered into an ATM Program with an aggregate offering price of up to $100 million for the sale of common stock[244] - PSLF has a $400.0 million senior secured revolving credit facility, increased from $325.0 million in August 2024, with interest at SOFR plus 225 basis points[298] - The company is actively managing its debt structure, with a focus on maintaining a balance between secured and subordinated debt[310] Investment Valuation and Policies - The fair value of the company's investments is primarily classified as Level 3, indicating reliance on unobservable inputs for valuation[251] - The company has adopted certain revisions to its valuation policies to comply with Rule 2a-5 under the 1940 Act, effective March 8, 2021[254] - The company utilizes a multi-step valuation process for investments without readily available market quotations, involving independent valuation firms[252] - The company evaluates the source of inputs for fair value assessments, ensuring compliance with ASC 820[255] Tax and Distributions - The company recorded a provision for taxes on net investment income of $0.7 million for both the three months ended December 31, 2025 and 2024, pertaining to U.S. federal excise tax[266] - The company expects to distribute dividends to maintain its RIC tax election, generally at least equal to 90% of net ordinary income and realized net short-term capital gains[263] - Distributions declared were $0.24 per share, totaling $15.7 million for both the three months ended December 31, 2025, and 2024[318] - The company transitioned from quarterly to monthly distributions effective October 2023, with future distributions determined by the board of directors[319] Market and Economic Conditions - The company acknowledges that significant changes in market interest rates could materially adversely affect net investment income or net assets[328] - The annualized impact of hypothetical base rate changes in interest rates shows that a 3% decrease in interest rates would result in a change in interest income net of interest expense of $(8,657,000) and a decrease of $(0.13) per share[327] - A 3% increase in interest rates would lead to a change in interest income net of interest expense of $9,847,000 and an increase of $0.15 per share[327] - The company may use standard hedging instruments to mitigate interest rate and foreign currency fluctuations but did not engage in such hedging activities during the reporting period[329] Cash and Assets - Cash and cash equivalents as of December 31, 2025, were $45.9 million, down from $51.8 million as of September 30, 2025[292] - Total assets increased to $1,409.3 million as of December 31, 2025, up from $1,315.4 million as of September 30, 2025[314] - Members' equity decreased to $107.1 million as of December 31, 2025, down from $121.0 million as of September 30, 2025[314] - Total cash equivalents are valued at $20.9 million, while total cash stands at $24.1 million, contributing to a total of $1,439.9 million in investments, cash equivalents, and cash[306] Sector Performance - The overall trend indicates a strong performance across various sectors, with several companies exceeding a net interest margin of 9%[10] - The company has significant investments in sectors such as healthcare, business services, and aerospace and defense, with notable debt issuances in these areas[306] - The healthcare and education sector is notably represented, with several acquisitions like Medina Health, LLC and Urology Management Holdings, Inc. contributing to the portfolio[310]

Investment Portfolio - The investment portfolio totaled $1,218.5 million, with net assets of $457.2 million and a net asset value per share of $7.00, reflecting a quarterly change of -1.5%[2] - Total investments at fair value were $1,218,474,000, down from $1,287,273,000[35] - The company managed approximately $10 billion of investable capital, including available leverage[41] Investment Income - Net investment income for the quarter was $7.0 million, or $0.11 per share, down from $13.0 million, or $0.20 per share, in the same quarter last year[18] - Total investment income decreased to $27.3 million from $34.2 million year-over-year, primarily due to a reduction in portfolio size and yield[16] - Net investment income for the three months ended December 31, 2025, was $6,992,000, compared to $12,992,000 for the same period in 2024[38] - Total investment income for the three months ended December 31, 2025, was $27,253,000, down from $34,207,000 in 2024[38] Distributions and Gains - The company declared distributions of $0.24 per share, totaling $15.7 million, consistent with the previous year[30] - The company realized net gains of $59.0 million for the quarter, compared to a loss of $(2.6) million in the same quarter last year[19] - The company reported a net realized gain on investments and debt of $59,002,000 for the three months ended December 31, 2025[39] Debt and Borrowings - The Truist Credit Facility was increased from $500 million to $535 million, with reduced pricing from SOFR plus 235 bps to SOFR plus 210 bps[25] - As of December 31, 2025, the company had $296.5 million in outstanding borrowings under the Truist Credit Facility, with a weighted average interest rate of 5.8%[26] - The company issued $75.0 million in aggregate principal amount of 7.0% Senior Unsecured Notes due February 1, 2029[32] Unrealized Depreciation - The net change in unrealized depreciation on investments was $(57.1) million for the quarter, compared to an appreciation of $2.4 million in the same quarter last year[21] Future Investments - The company invested $115.1 million in new and existing portfolio companies during the quarter, with a weighted average yield of 9.7%[9] - The company anticipates continued focus on middle-market private companies for future investments[40] Asset Changes - Total assets as of December 31, 2025, were $1,293,517,000, a decrease from $1,349,554,000 as of September 30, 2025[35] - Net increase in net assets resulting from operations was $8,955,000 for the three months ended December 31, 2025, compared to $16,084,000 in 2024[39] - Net asset value per share decreased to $7.00 as of December 31, 2025, from $7.11 as of September 30, 2025[36] Debt Investments - The weighted average yield on debt investments was 10.9%, with 89% of the debt portfolio being variable-rate investments[2][7]