PennantPark Investment (US:PNNT)2025-05-12 20:06Portfolio Overview - As of March 31, 2025, the portfolio totaled $1,213.6 million, with 41% in first lien secured debt and a weighted average yield on interest-bearing debt investments of 12.0%[234] - As of September 30, 2024, the portfolio totaled $1,328.1 million, with 50% in first lien secured debt and a weighted average yield on interest-bearing debt investments of 12.3%[235] - The average investment size in the overall portfolio was $6.9 million as of March 31, 2025[234] - PSLF's portfolio as of March 31, 2025, totaled $1,392.9 million, with a weighted average yield on interest-bearing debt investments of 10.4%[239] - As of March 31, 2025, the PennantPark Senior Loan Fund (PSLF) had total assets of $1,463.5 million, an increase from $1,073.4 million as of September 30, 2024[293] - The investment portfolio of PSLF consisted of debt investments in 119 portfolio companies as of March 31, 2025, compared to 102 companies as of September 30, 2024[293] Investment Activity - For the three months ended March 31, 2025, the company invested $176.8 million in three new and 52 existing portfolio companies, with a weighted average yield on debt investments of 10.7%[236] - For the three months ended March 31, 2024, the company invested $188.5 million in six new and 43 existing portfolio companies, with a weighted average yield of 11.7%[237] - For the six months ended March 31, 2025, PSLF invested $523.7 million in 23 new and 57 existing portfolio companies[240] - For the six months ended March 31, 2024, PSLF's total investments amounted to $194.2 million, with a weighted average yield of 12.2%[241] Financial Performance - For the three and six months ended March 31, 2025, investment income was $30.7 million and $64.9 million, respectively, a decrease from $36.0 million and $70.3 million for the same periods in 2024[270] - For the three and six months ended March 31, 2025, expenses totaled $19.2 million and $40.4 million, respectively, down from $21.7 million and $40.4 million in 2024[271] - Net investment income for the three and six months ended March 31, 2025, was $11.4 million and $24.4 million, or $0.18 and $0.37 per share, compared to $14.3 million and $29.9 million, or $0.22 and $0.46 per share in 2024[272] - For the three and six months ended March 31, 2025, net realized losses totaled $(27.7) million and $(30.3) million, compared to $(31.0) million and $(29.2) million in 2024[273] - The net change in unrealized appreciation on investments for the three and six months ended March 31, 2025, was $27.1 million and $29.5 million, respectively, down from $33.2 million and $28.3 million in 2024[274] Debt and Financing - The company expects to continue using debt capital and proceeds from public and private offerings to finance investment objectives[228] - The Truist Credit Facility had outstanding borrowings of $314.5 million as of March 31, 2025, with a weighted average interest rate of 6.7%[280] - PSLF entered into a $400.0 million senior secured revolving credit facility, increased from $325.0 million in August 2024[296] - The company has not engaged in interest rate hedging activities during the reporting periods, which may expose it to risks associated with interest rate fluctuations[326] Cash and Liquidity - As of March 31, 2025, the company had cash and cash equivalents of $32.6 million, down from $49.9 million as of September 30, 2024[289] - For the six months ended March 31, 2025, operating activities provided cash of $161.1 million, while financing activities used cash of $178.3 million, primarily for credit facility repayments and stockholder distributions[290] - Cash and cash equivalents increased to $62,201,000 as of March 31, 2025, from $36,595,000 as of September 30, 2024, reflecting a growth of 70%[309] Distributions - The company must distribute dividends equal to at least 90% of its net ordinary income and realized net short-term capital gains to maintain its RIC tax election[259] - The company declared distributions of $0.24 per share for the three months ended March 31, 2025, compared to $0.21 per share in the same period of 2024, reflecting a 14.3% increase[314] - The company transitioned from quarterly to monthly distributions effective October 2023, with future monthly distributions determined by the board of directors[315] Valuation and Accounting - PSLF's portfolio generally consists of illiquid securities, and the board of directors undertakes a multi-step valuation process each quarter for investments without readily available market quotations[246] - The company has adopted ASC 825-10 for the Truist Credit Facility, incurring $0.3 million in expenses related to amendment costs for the three and six months ended March 31, 2025[252] - The company has adopted ASU 2022-03, which clarifies fair value measurement disclosures, with no material impact on consolidated financial statements[320] - The FASB issued ASU 2023-07, effective for fiscal years beginning after December 15, 2023, which will enhance segment disclosure requirements, currently under evaluation by the company[321] Market and Sector Analysis - The average coupon rates for various sectors include 11.55% for software and 10.69% for transportation, indicating a diverse interest rate environment across industries[303] - The healthcare, education, and childcare sector shows a notable interest rate of 10.65% for NORA Acquisition, LLC, highlighting the sector's investment attractiveness[303] - The company has a diverse portfolio with investments across various sectors, including aerospace and defense, healthcare, and business services, indicating a strategic approach to market expansion[303]