PennantPark Floating Rate Capital .(US:PFLT)2026-02-09 21:07Portfolio Overview - As of December 31, 2025, the company's portfolio totaled $2,605.3 million, consisting of $2,310.2 million in first lien secured debt, $20.1 million in second lien secured debt and subordinated debt, and $275.0 million in preferred and common equity[256] - The overall portfolio consisted of 160 companies with an average investment size of $16.3 million as of December 31, 2025[256] - As of September 30, 2025, the portfolio totaled $2,773.3 million, with a weighted average yield on debt investments of 10.2%[257] - As of December 31, 2025, PSSL's portfolio totaled $1,195.0 million, consisting of 120 companies with an average investment size of $10.0 million and a weighted average yield of 9.6%[260] - As of December 31, 2025, the portfolio of PennantPark Senior Secured Loan Fund II LLC totaled $193.2 million, consisting of 41 companies with an average investment size of $4.7 million and a weighted average yield on debt investments of 9.0%[263] Investment Activity - For the three months ended December 31, 2025, the company invested $301.0 million in four new and 51 existing portfolio companies at a weighted average yield of 10.0%[258] - For the three months ended December 31, 2024, the company invested $606.9 million in 11 new and 58 existing portfolio companies at a weighted average yield of 10.3%[259] - For the three months ended December 31, 2025, PSSL invested $133.8 million in four new and 17 existing portfolio companies at a weighted average yield of 9.4%[261] - For the three months ended December 31, 2025, the company invested $196.5 million in 42 new portfolio companies at a weighted average yield of 9.3%, with sales and repayments totaling $2.9 million[264] Financial Performance - For the three months ended December 31, 2025, investment income was $70.1 million, an increase from $67.0 million in the same period of 2024, primarily due to the growth in the debt portfolio[295] - Total expenses for the three months ended December 31, 2025, were $43.5 million, up from $37.0 million in 2024, mainly driven by increased interest expenses from higher borrowings[296] - Net investment income for the three months ended December 31, 2025, was $26.6 million or $0.27 per share, down from $30.0 million or $0.37 per share in 2024, attributed to higher interest expenses and one-time costs[297] - Net realized gains for the three months ended December 31, 2025, were $1.5 million, a significant decrease from $26.7 million in 2024, reflecting changes in market conditions[298] - The net change in unrealized depreciation on investments for the three months ended December 31, 2025, was $(32.3) million, compared to $(29.0) million in 2024, with total unrealized depreciation as of December 31, 2025, at $(78.4) million[299] Debt and Financing - As of December 31, 2025, the Credit Facility had commitments of $768.0 million, with a weighted average interest rate of 5.9%[304] - The annualized weighted average cost of debt for the three months ended December 31, 2025, was 6.2%, down from 7.0% in 2024[305] - The company incurred $0.5 million of expenses related to amendment costs on the Credit Facility during the three months ended December 31, 2025[277] - The company completed a $474.6 million term debt securitization in February 2025, retaining $113.6 million of the debt securitization[320] - The company entered into equity distribution agreements for an aggregate offering price of up to $500.0 million under the 2024 ATM Program[323] Cash and Liquidity - As of December 31, 2025, the company had cash and cash equivalents of $95.3 million, down from $122.7 million as of September 30, 2025[329] - For the three months ended December 31, 2025, operating activities provided cash of $148.6 million, while financing activities used cash of $176.0 million[331] - The company has $192.2 million of common stock available to be sold under the ATM Programs as of December 31, 2025[324] Tax and Regulatory - The company operates to maintain its election as a RIC, resulting in an effective tax rate of 0% before excise tax and income taxes incurred by the Taxable Subsidiary[291] - The company recorded a provision for taxes on net investment income of $0.2 million for both the three months ended December 31, 2025, and 2024[288] Market Conditions and Strategy - The overall market conditions suggest a mixed outlook, with some sectors experiencing growth while others face declines[1][2][3] - Future strategies may involve focusing on product innovation and market expansion to counteract revenue declines in certain sectors[1][2][3] - The company is focused on maintaining a diversified investment strategy across multiple sectors, including containers and packaging, consumer services, and automobiles[346] - Future outlook includes potential market expansions and strategic acquisitions to enhance growth and profitability[346] Investment Sectors - The company is actively investing in sectors such as Business Services, Healthcare, and Media, reflecting a strategic focus on high-growth industries[344] - The overall performance of the healthcare and pharmaceuticals sector shows a coupon rate range from 8.17% to 10.07%, indicating robust market conditions[345] - The company has a significant investment in First Lien Secured Debt, amounting to 1,422.7% of Net Assets[344] Accounting and Reporting - The company has adopted ASC 825-10 for the Credit Facility, allowing it to report selected financial assets and liabilities at fair value, which helps mitigate volatility in earnings[277] - The company has outlined the annualized impact of hypothetical interest rate changes, indicating that a 3% increase in interest rates could lead to a $26.6 million increase in net interest income[375] - The company did not engage in interest rate hedging activities or foreign currency derivatives hedging activities during the reporting periods[377]