Prospect Capital(PSEC) - 2026 Q2 - Quarterly Results

Financial Performance - Net Investment Income (NII) for the quarter ended December 31, 2025, was $90,888,000, an increase of 14.4% from $79,350,000 in the previous quarter[2] - Net Income (Loss) applicable to common shareholders was $(6,576,000) for the quarter, compared to $48,087,000 in the previous quarter[2] - The net investment income for the three months ended December 31, 2025, was $90,888,000, compared to $86,431,000 for the same period in 2024, reflecting a year-over-year increase of 5.7%[29] - Total interest income for the three months ended December 31, 2025, was $149,048,000, down from $168,798,000 in the prior year, indicating a decrease of 11.1%[29] - The diluted net decrease from operations applicable to common stockholders was $0.01 for the three months ended December 31, 2025, compared to a decrease of $0.07 in the same period of 2024[31] Asset and Liability Management - Total assets decreased to $6,534,578,000 from $6,641,870,000 in the previous quarter, reflecting a decline of 1.6%[2] - As of December 31, 2025, the total assets amounted to $6,534,578,000, a decrease from $6,804,938,000 as of June 30, 2025[27] - Total liabilities were reported at $1,952,326,000 as of December 31, 2025, down from $2,186,266,000 as of June 30, 2025[27] - The net asset value per common share decreased to $6.21 as of December 31, 2025, from $6.56 as of June 30, 2025, representing a decline of 5.3%[27] - Net asset value per common share decreased to $6.21 at the end of the period from $8.10 at the beginning, representing a decline of approximately 23.4%[31] Investment Strategy and Performance - The company has invested over $22 billion across more than 450 investments since its IPO, exiting over 350 of these investments[4] - The investment level exited gross internal rate of return (IRR) for exited investments was approximately 12%, with total proceeds of about $16.7 billion from $13.1 billion invested[5] - The portfolio included 2.8% of investments in software companies, significantly lower than the 22% average across similar companies[12] - The real estate property portfolio at National Property REIT Corp. represented 14.1% of total investments, with an unlevered investment-level gross cash IRR of 24% since inception[13] - The company focuses on investing in middle-market companies with annual revenues of less than $750 million and enterprise values of less than $1 billion[35] - The company primarily invests in senior and secured loans, typically involving amounts less than $250 million[36] Capital Management - Cumulative paid and declared distributions to common shareholders reached approximately $4.7 billion, with $21.93 per share since inception[3] - The company has raised significant capital from its $2.25 billion perpetual preferred stock offering programs, providing a diversified source of capital without scheduled maturity risk[21] - The company adopted a dividend reinvestment plan (DRIP) that allows shareholders to reinvest distributions at a 5% discount to the market price[22] - Total distributions to common stockholders were $0.14 per share for the three months ended December 31, 2025, compared to $0.15 per share in the same period of 2024[31] Risk Management - The company has a strategy of maximizing returns while minimizing risk through rigorous credit analysis and cash-flow assessments[39] - Forward-looking statements made by the company are subject to various risks and uncertainties, and actual results may vary materially[47] Debt Management - The weighted average cost of unsecured debt financing was 4.68% as of December 31, 2025[21] - Unsecured debt and perpetual preferred equity accounted for 85.3% of total debt and perpetual preferred equity as of December 31, 2025[27] Investment Activity - Total originations for the quarter were $80,434,000, with middle-market investments comprising 100% of this amount[17] - The company’s first lien senior secured loans increased to 71.4% of total investments at cost, up from 67.5% a year earlier[16] - Middle Market Portfolio Cash Interest Coverage reflects the average cash interest coverage of each middle-market loan portfolio investment, indicating the ability to make interest payments[41] Realized Losses - The company reported net realized losses from investments of $141,303,000 for the three months ended December 31, 2025[29]