PennantPark Investment (PNNT) - 2025 Q3 - Quarterly Results

Financial Highlights The company's financial position as of June 30, 2025, shows a portfolio of $1.1716 billion and net assets of $480.6 million, with a quarterly decrease in NAV per share | Metric | June 30, 2025 | | :--- | :--- | | Assets and Liabilities: | | | Investment Portfolio | $1.1716 billion | | Net Assets | $480.6 million | | Net Asset Value per Share | $7.36 | | Quarterly Change in NAV per Share | -1.6% | | Weighted Average Yield on Debt Investments | 11.5% | | Operating Performance: | | | Net Investment Income | $11.8 million | | Net Investment Income per Share | $0.18 | | Core Net Investment Income per Share | $0.18 | | Declared Dividends per Share | $0.24 | | Portfolio Activity: | | | Investment Purchases | $87.7 million | | Investment Sales and Repayments | $132.2 million | Portfolio and Investment Activity This section details the company's investment strategy, portfolio composition, quality, and recent investment activities, including the PennantPark Senior Loan Fund Management Commentary The company's management is encouraged by the recovery in recent transaction activity, anticipating increased new loan originations and potential equity exits, while strategically rotating equity into debt to boost core net investment income - The company's strategic focus is to rotate equity positions into debt investments to drive growth in Core Net Investment Income (Core NII)[6] - Management will continue to utilize substantial spillover income to cover any shortfalls between Core Net Investment Income and dividends[6] Portfolio Composition and Quality As of June 30, 2025, the total investment portfolio decreased to $1.1716 billion, with a shift from first lien secured debt to preferred and common equity, and an increase in non-accrual companies Portfolio Composition | Portfolio Composition | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total Investment Portfolio | $1.1716 billion | $1.3281 billion | | First Lien Secured Debt | 41% | 50% | | Second Lien Secured Debt | 1% | 5% | | Subordinated Debt | 16% | 14% | | Preferred and Common Equity | 31% | 23% | | U.S. Government Securities | 11% | 8% | Portfolio Quality Metrics | Portfolio Quality Metrics | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Weighted Average Yield on Debt Investments | 11.5% | 12.3% | | Number of Non-Accrual Companies | 4 | 2 | | Non-Accrual Investments (Fair Value % of Total Portfolio) | 0.7% | 2.3% | | Total Portfolio Companies | 158 | 152 | Investment Activity Investment activity for the three and nine months ended June 30, 2025, shows a decrease in investments made and an increase in sales and repayments compared to the prior year Investment Activity (Three Months Ended June 30) | Investment Activity (Three Months Ended June 30) | 2025 | 2024 | | :--- | :--- | :--- | | Investments Made | $87.7 million | $163.1 million | | Sales and Repayments | $132.2 million | $132.9 million | | Weighted Average Yield on New Investments | 10.0% | 12.0% | Investment Activity (Nine Months Ended June 30) | Investment Activity (Nine Months Ended June 30) | 2025 | 2024 | | :--- | :--- | :--- | | Investments Made | $560.2 million | $752.1 million | | Sales and Repayments | $749.0 million | $380.1 million | PennantPark Senior Loan Fund (PSLF) The PSLF's total investment portfolio increased to $1.3391 billion as of June 30, 2025, despite a decrease in investments made and an increase in sales and repayments during the quarter PSLF Portfolio Overview | PSLF Portfolio Overview | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total Investment Portfolio | $1.3391 billion | $1.0312 billion | | Number of Companies | 115 | 102 | | Average Investment Size | $11.6 million | $10.1 million | | Weighted Average Yield on Debt Investments | 10.4% | 11.3% | PSLF Investment Activity (Three Months Ended June 30) | PSLF Investment Activity (Three Months Ended June 30) | 2025 | 2024 | | :--- | :--- | :--- | | Investments Made | $22.0 million | $56.0 million | | Sales and Repayments | $71.4 million | $54.9 million | Results of Operations This section analyzes the company's investment income, expenses, net investment income, and realized and unrealized gains/losses, culminating in the net change in net assets from operations Investment Income Investment income for the three and nine months ended June 30, 2025, decreased year-over-year, primarily due to a smaller investment portfolio and a lower weighted average yield on debt investments Investment Income (Millions of Dollars) | Investment Income (Millions of Dollars) | Three Months Ended June 30 | Nine Months Ended June 30 | | :--- | :--- | :--- | | 2025 Fiscal Year | $29.6 | $94.4 | | 2024 Fiscal Year | $37.0 | $107.3 | - The year-over-year decrease in investment income is primarily due to a smaller total investment portfolio and a lower weighted average yield on debt investments[15] Expenses Total expenses for the three and nine months ended June 30, 2025, decreased year-over-year, mainly driven by reduced debt-related interest and fees, and lower incentive fees Total Expenses (Millions of Dollars) | Total Expenses (Millions of Dollars) | Three Months Ended June 30 | Nine Months Ended June 30 | | :--- | :--- | :--- | | 2025 Fiscal Year | $17.8 | $58.2 | | 2024 Fiscal Year | $21.3 | $61.7 | - The year-over-year decrease in expenses is primarily due to reduced debt-related interest and fees and lower incentive fees[16] Net Investment Income Net investment income for the three months ended June 30, 2025, was $11.8 million ($0.18 per share), a decrease from the prior year, mainly due to lower investment income partially offset by reduced expenses Net Investment Income | Net Investment Income | Three Months Ended June 30 | Nine Months Ended June 30 | | :--- | :--- | :--- | | 2025 Fiscal Year | | | | Total | $11.8 million | $36.2 million | | Per Share | $0.18 | $0.55 | | 2024 Fiscal Year | | | | Total | $15.7 million | $45.7 million | | Per Share | $0.24 | $0.70 | Realized and Unrealized Gains/Losses For the three months ended June 30, 2025, the company reported net realized losses of $0.5 million and net unrealized losses of $0.2 million, with cumulative net unrealized appreciation of $40.4 million in the portfolio Gains/Losses Summary (Millions of Dollars) | Gains/Losses Summary (Millions of Dollars) | Three Months Ended June 30 | Nine Months Ended June 30 | | :--- | :--- | :--- | | 2025 Fiscal Year | | | | Net Realized Gains (Losses) | $(0.5) million | $(30.8) million | | Net Change in Unrealized Appreciation (Depreciation) | $(0.2) million | $29.3 million | | 2024 Fiscal Year | | | | Net Realized Gains (Losses) | $(6.9) million | $(36.1) million | | Net Change in Unrealized Appreciation (Depreciation) | $(5.1) million | $23.2 million | - As of June 30, 2025, the investment portfolio had cumulative net unrealized appreciation of $40.4 million, compared to $11.2 million as of September 30, 2024[20] Net Change in Net Assets The net increase in net assets from operations for the three months ended June 30, 2025, was $8.2 million ($0.12 per share), an increase from the prior year, with a similar trend for the nine-month period Net Increase (Decrease) in Net Assets Resulting from Operations | Net Increase (Decrease) in Net Assets Resulting from Operations | Three Months Ended June 30 | Nine Months Ended June 30 | | :--- | :--- | :--- | | 2025 Fiscal Year | | | | Total | $8.2 million | $33.7 million | | Per Share | $0.12 | $0.52 | | 2024 Fiscal Year | | | | Total | $3.7 million | $30.5 million | | Per Share | $0.06 | $0.47 | Liquidity and Capital Resources The company's liquidity is primarily derived from operating cash flow, investment sales, and debt financing, with a notable shift in cash flow dynamics compared to the prior year - The company's liquidity and capital resources primarily stem from cash flow from operations, proceeds from investment sales and repayments, securities offerings, and debt financing[23] Key Liquidity Metrics | Key Liquidity Metrics | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Truist Credit Facility Outstanding Borrowings | $316.5 million | $461.5 million | | Truist Credit Facility Available Capacity | $183.5 million | $13.5 million | | Cash and Cash Equivalents | $70.5 million | $49.9 million | - For the nine months ended June 30, 2025, operating activities provided $212.6 million in cash, while financing activities used $192.0 million, primarily for credit repayments and dividend payments, a reversal from the prior year's cash flow dynamics[26][27] Distributions and Recent Developments This section outlines the company's declared dividends for the quarter and future months, alongside a recent successful refinancing of its CLO VII subsidiary Distributions For the three months ended June 30, 2025, the company declared dividends of $0.24 per share, an increase from the prior year, and announced future monthly dividends of $0.08 per share Declared Dividends | Declared Dividends | Three Months Ended June 30 | Nine Months Ended June 30 | | :--- | :--- | :--- | | 2025 Fiscal Year | | | | Per Share | $0.24 | $0.72 | | Total | $15.7 million | $47.0 million | | 2024 Fiscal Year | | | | Per Share | $0.22 | $0.64 | | Total | $14.4 million | $41.8 million | Future Dividend Declarations | Future Dividend Declarations | | | | :--- | :--- | :--- | | Record Date | Payment Date | Dividend Per Share | | August 15, 2025 | September 2, 2025 | $0.08 | | September 15, 2025 | September 30, 2025 | $0.08 | Recent Developments In July 2025, PSLF's subsidiary, PennantPark CLO VII, LLC, successfully refinanced $300 million of its debt, reducing its weighted average cost of capital from SOFR+3.31% to SOFR+2.63% - In July 2025, PSLF's subsidiary CLO VII successfully refinanced, reducing its weighted average cost of capital from SOFR+3.31% to SOFR+2.63%[29] Financial Statements This section presents the company's consolidated statements of assets and liabilities and consolidated statements of operations, highlighting key financial positions and performance metrics Consolidated Statements of Assets and Liabilities As of June 30, 2025, total assets were $1.2529 billion, total liabilities were $772.3 million, and net assets were $480.6 million, with a decrease in NAV per share from $7.56 to $7.36 Key Balance Sheet Items (Millions of Dollars) | Key Balance Sheet Items (Millions of Dollars) | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total Investments (Fair Value) | $1,171.6 | $1,328.1 | | Cash and Cash Equivalents | $70.5 | $49.9 | | Total Assets | $1,252.9 | $1,389.1 | | Total Liabilities | $772.3 | $895.2 | | Total Net Assets | $480.6 | $493.9 | | Net Asset Value Per Share | $7.36 | $7.56 | Consolidated Statements of Operations For the three months ended June 30, 2025, total investment income was $29.6 million, net investment income was $11.8 million, and the net increase in net assets from operations was $8.2 million Key Operating Statement Items (Millions of Dollars) | Key Operating Statement Items (Millions of Dollars) | Three Months Ended June 30 (2025) | Three Months Ended June 30 (2024) | | :--- | :--- | :--- | | Total Investment Income | $29.6 | $37.0 | | Net Expenses | $17.8 | $21.3 | | Net Investment Income | $11.8 | $15.7 | | Net Realized and Unrealized Gains (Losses) on Investments and Debt | $(3.6) | $(12.0) | | Net Increase (Decrease) in Net Assets Resulting from Operations | $8.2 | $3.7 |