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PennantPark Floating Rate Capital .(PFLT) - 2025 Q3 - Quarterly Report

PART I. CONSOLIDATED FINANCIAL INFORMATION Item 1. Consolidated Financial Statements Financial statements detail the company's position, operations, and cash flows, showing asset growth, increased income, and a lower NAV per share Consolidated Statements of Assets and Liabilities Total assets increased to $2.52 billion, but Net Asset Value per share decreased to $10.96 from $11.31 Consolidated Statements of Assets and Liabilities Highlights (in thousands, except per share data) | Metric | June 30, 2025 (unaudited) | September 30, 2024 | | :--- | :--- | :--- | | Total Investments at Fair Value | $2,403,515 | $1,983,504 | | Total Assets | $2,521,602 | $2,108,845 | | Total Liabilities | $1,434,089 | $1,231,551 | | Total Net Assets | $1,087,513 | $877,294 | | Net Asset Value per share | $10.96 | $11.31 | Consolidated Statements of Operations Investment income increased for both three and nine-month periods, but net unrealized losses led to lower net asset growth Key Operational Results (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Investment Income | $63,502 | $48,505 | $192,449 | $130,831 | | Total Expenses | $38,877 | $27,295 | $112,827 | $71,085 | | Net Investment Income | $24,625 | $21,210 | $79,622 | $59,746 | | Net Increase in Net Assets | $19,298 | $16,920 | $48,852 | $70,499 | | Net Investment Income per Share | $0.25 | $0.31 | $0.88 | $0.95 | | Net Increase in Net Assets per Share | $0.19 | $0.25 | $0.54 | $1.12 | Consolidated Statements of Changes in Net Assets Net assets increased by $210.2 million to $1.09 billion, primarily from operations and capital transactions, offset by distributions - Net assets grew from $877.3 million at the beginning of the period to $1,087.5 million at the end16 Changes in Net Assets for the Nine Months Ended June 30, 2025 (in thousands) | Description | Amount | | :--- | :--- | | Net Increase from Operations | $48,852 | | Distributions to Stockholders | $(83,389) | | Net Increase from Capital Transactions | $244,756 | | Net Increase in Net Assets | $210,219 | Consolidated Statements of Cash Flows Operating activities used $386.1 million cash, largely offset by $376.7 million from financing, leading to a $9.3 million net cash decrease Cash Flow Summary for the Nine Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(386,052) | $(509,641) | | Net Cash Provided by Financing Activities | $376,732 | $493,675 | | Net (Decrease) in Cash | $(9,320) | $(15,966) | Consolidated Schedules of Investments The investment portfolio expanded to $2.40 billion, predominantly in first lien secured debt, with significant PSSL holdings Investment Portfolio Composition (in thousands) | Investment Classification | Fair Value at June 30, 2025 | Fair Value at Sept 30, 2024 | | :--- | :--- | :--- | | Non-Controlled, Non-Affiliated | | | | First Lien Secured Debt | $1,912,951 | $1,472,064 | | Subordinate Debt | $12,506 | $2,693 | | Preferred Equity | $18,801 | $18,305 | | Common Equity/Warrants | $168,318 | $139,207 | | Subtotal | $2,112,576 | $1,632,269 | | Controlled, Affiliated (PSSL) | | | | First Lien Secured Debt | $237,650 | $274,634 | | Equity Interests | $53,289 | $76,601 | | Subtotal | $290,939 | $351,235 | | Total Investments | $2,403,515 | $1,983,504 | - As of June 30, 2025, two portfolio companies were on non-accrual status, representing 1.0% of the portfolio at cost and 0.5% at fair value88 Notes to Consolidated Financial Statements Notes detail the company's BDC structure, investment strategy, fee arrangements, debt facilities, and PSSL joint venture - The company's investment objective is to generate current income and capital appreciation by investing primarily in floating rate loans to U.S. middle-market private companies61 - In February 2025, the company completed a new $474.6 million term debt securitization (2037 Debt Securitization), retaining $113.6 million of the subordinated and Class D notes72 - The company's asset coverage ratio was 177% as of June 30, 2025, above the regulatory minimum of 150%185 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, portfolio growth to $2.4 billion, 10.4% yield, and financing, confirming sufficient liquidity Portfolio Summary as of June 30, 2025 | Metric | Value | | :--- | :--- | | Total Portfolio Value | $2,403.5 million | | Number of Portfolio Companies | 155 | | Average Investment Size | $15.5 million | | Weighted Average Yield on Debt | 10.4% | | % First Lien Secured Debt | 89% | | % Subordinated Debt | <1% | | % Preferred & Common Equity | 10% | - For the nine months ended June 30, 2025, the company invested $1.1 billion in 18 new and 112 existing portfolio companies, with sales and repayments totaling $669.5 million242 - The company established a new $500 million at-the-market (ATM) offering program in July 2024, raising $244.8 million in net proceeds by issuing 21.6 million shares through its ATM programs during the nine months ended June 30, 20257879 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate risk, with 99% variable-rate debt; a 1% rate increase boosts net interest income by $9.5 million Annualized Impact of Hypothetical Interest Rate Changes | Change in Interest Rates | Change in Net Interest Income (in thousands) | Change in Net Interest Income Per Share | | :--- | :--- | :--- | | Down 1% | $(9,453) | $(0.10) | | Up 1% | $9,453 | $0.10 | | Up 2% | $18,905 | $0.19 | | Up 3% | $28,358 | $0.29 | Item 4. Controls and Procedures CEO and CFO confirmed effective disclosure controls as of June 30, 2025, with no material internal control changes - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025346 - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2025347 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company, its Investment Adviser, and Administrator are not subject to any material legal proceedings - The company is not currently subject to any material legal proceedings348 Item 1A. Risk Factors Key risks include U.S. trade policy changes affecting portfolio companies and significant cybersecurity vulnerabilities - Changes in U.S. trade policies and tariffs could increase costs or reduce demand for portfolio companies' products, adversely affecting their operations350 - The company is subject to significant cybersecurity risks, including data breaches and system failures, which could lead to financial losses, regulatory intervention, and reputational damage351352353 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the reporting period - None355 Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - None356 Item 4. Mine Safety Disclosures This disclosure item is not applicable to the company's operations - Not applicable357 Item 5. Other Information This item is not applicable, and no Rule 10b5-1 trading arrangements were adopted or terminated - Not applicable358 Item 6. Exhibits This section lists all exhibits filed with the report, including credit agreement amendments and certifications