PennantPark Investment (PNNT) - 2024 Q2 - Quarterly Results

Financial Highlights The company reported a NAV per share of $7.69, a 0.5% increase, with net investment income covering distributions and a growing investment portfolio Q2 2024 Key Financial Metrics | Metric | Value ($M) | | :--- | :--- | | Assets & Liabilities | | | Investment Portfolio | $1,238.2 | | Net Assets | $501.5 | | GAAP Net Asset Value per Share | $7.69 | | Quarterly Increase in GAAP NAV/share | 0.5% | | Regulatory Debt to Equity | 1.42x | | Weighted Average Yield on Debt | 12.5% | | Operating Results | | | Net Investment Income per Share | $0.22 | | Core Net Investment Income per Share | $0.22 | | Distributions Declared per Share | $0.21 | | Portfolio Activity | | | Purchases of Investments | $188.5 | | Sales and Repayments | $176.2 | - Core Net Investment Income (Core NII) for the quarter ended March 31, 2024, was equal to the GAAP Net Investment Income of $0.22 per share, as there were no one-time or non-recurring items[4] Distribution Announcement The company announced a 14.3% increase in its monthly distribution to $0.08 per share, driven by strong portfolio performance and robust earnings - On May 8, 2024, the company declared a monthly distribution of $0.08 per share for June 2024, a 14.3% increase from the prior distribution[6] - The distribution is payable on July 1, 2024, to stockholders of record as of June 14, 2024, and is expected to be paid from taxable net investment income[6] - Chairman and CEO Arthur Penn stated the increase is based on "continued strong underlying credit performance" and a "robust" earnings stream, highlighting returns from the PSLF Joint Venture[7] Portfolio and Investment Activity The investment portfolio grew to $1.24 billion, primarily in first lien secured and variable-rate debt, with increased non-accrual investments Overall Portfolio Composition The investment portfolio grew to $1.24 billion, with a higher allocation to first lien secured debt and an increase in non-accrual investments Portfolio Composition Comparison | Metric | March 31, 2024 ($M) | September 30, 2023 ($M) | | :--- | :--- | :--- | | Total Portfolio | $1,238.2 | $1,101.7 | | First Lien Secured Debt | 55% | 48% | | Second Lien Secured Debt | 5% | 7% | | Subordinated Debt | 13% | 14% | | Preferred & Common Equity | 22% | 22% | | Debt Portfolio | | | | Variable-Rate Investments | 97% | 95% | | Weighted Avg. Yield | 12.5% | 13.0% | | Credit Quality | | | | Companies on Non-Accrual | 2 | 1 | | Non-Accrual (% of Fair Value) | 3.0% | 0.0% | Investment Activity Investment activity significantly increased, with $188.5 million invested and $176.2 million in sales and repayments for the quarter Investment Activity (Three Months Ended March 31) | Activity | 2024 ($M) | 2023 ($M) | | :--- | :--- | :--- | | Investments | $188.5 | $58.3 | | Sales & Repayments | $176.2 | $114.2 | | Weighted Avg. Yield on New Debt | 11.7% | 11.8% | Investment Activity (Six Months Ended March 31) | Activity | 2024 ($M) | 2023 ($M) | | :--- | :--- | :--- | | Investments | $419.6 | $144.8 | | Sales & Repayments | $247.2 | $136.8 | | Weighted Avg. Yield on New Debt | 11.8% | 11.5% | PennantPark Senior Loan Fund (PSLF) Activity The PSLF portfolio grew to $923.9 million, with significant investment activity including purchases from the Company - PSLF's portfolio increased to $923.9 million as of March 31, 2024, from $804.2 million as of September 30, 2023[12] - For the three months ended March 31, 2024, PSLF invested $113.2 million and had sales/repayments of $49.7 million, with investment activity substantially higher than the $38.5 million invested in the same period of 2023[13][14] Results of Operations Net investment income decreased to $14.3 million, or $0.22 per share, while net assets from operations significantly increased due to unrealized appreciation Investment Income Total investment income slightly decreased to $36.0 million for the quarter but increased to $70.3 million for the six-month period Investment Income Breakdown (in millions) | Period | Q2 2024 ($M) | Q2 2023 ($M) | Six Months 2024 ($M) | Six Months 2023 ($M) | | :--- | :--- | :--- | :--- | :--- | | Total Investment Income | $36.0 | $36.3 | $70.3 | $66.3 | Expenses Total expenses increased to $21.7 million for the quarter, primarily due to higher debt-related interest and administrative costs Expenses Breakdown (in millions) | Period | Q2 2024 ($M) | Q2 2023 ($M) | Six Months 2024 ($M) | Six Months 2023 ($M) | | :--- | :--- | :--- | :--- | :--- | | Total Expenses | $21.7 | $19.7 | $40.4 | $39.3 | Net Investment Income (NII) Net investment income decreased to $14.3 million, or $0.22 per share, primarily due to higher expenses outpacing investment income Net Investment Income Comparison | Period | Q2 2024 ($M) | Q2 2023 ($M) | | :--- | :--- | :--- | | Net Investment Income | $14.3 | $16.6 | | NII per Share | $0.22 | $0.26 | Realized and Unrealized Gains/Losses The company recorded a net realized loss of $31.0 million offset by $33.2 million in unrealized appreciation, resulting in a net gain from valuation changes - Net realized losses for Q2 2024 were $(31.0) million, a substantial improvement from $(148.7) million in Q2 2023[20] - The net change in unrealized appreciation on investments for Q2 2024 was $33.2 million, compared to $135.4 million in Q2 2023[21] - Overall net unrealized appreciation on investments stood at $12.0 million as of March 31, 2024, reversing the net unrealized depreciation of $(16.3) million as of September 30, 2023[21] Net Change in Net Assets Resulting from Operations The company reported a net increase in net assets from operations of $16.1 million, or $0.25 per share, a significant improvement year-over-year Net Increase in Net Assets from Operations | Period | Q2 2024 ($M) | Q2 2023 ($M) | | :--- | :--- | :--- | | Net Increase in Net Assets | $16.1 | $4.9 | | Per Share | $0.25 | $0.07 | Liquidity and Capital Resources The company maintained $35.4 million in cash and $78.5 million in unused borrowing capacity, with increased credit facility utilization for investments - Cash and cash equivalents were $35.4 million as of March 31, 2024[26] Credit Facility Status | Metric | March 31, 2024 ($M) | September 30, 2023 ($M) | | :--- | :--- | :--- | | Outstanding Borrowings | $396.5 | $212.4 | | Unused Capacity | $78.5 | $262.6 | | Weighted Avg. Interest Rate | 7.7% | 7.7% | - For the six months ended March 31, 2024, cash used in operating activities was $150.9 million, primarily for investment activities, while cash provided by financing activities was $147.5 million, mainly from credit facility borrowings[26][27] Financial Statements Total assets increased to $1.29 billion, driven by portfolio growth, while liabilities also rose, resulting in a slight decrease in net assets to $501.5 million Consolidated Statements of Assets and Liabilities Total investments reached $1.24 billion, total assets $1.29 billion, and total net assets $501.5 million, with NAV per share at $7.69 Key Balance Sheet Items (in thousands) | Account | March 31, 2024 ($K) | September 30, 2023 ($K) | | :--- | :--- | :--- | | Total Investments (Fair Value) | $1,238,231 | $1,101,647 | | Total Assets | $1,291,239 | $1,156,977 | | Total Liabilities | $789,710 | $654,790 | | Total Net Assets | $501,529 | $502,187 | | Net Asset Value per Share | $7.69 | $7.70 | Consolidated Statements of Operations For the quarter, total investment income was $36.0 million, leading to $14.3 million in net investment income and a $16.1 million net increase in net assets Key Income Statement Items (Three Months Ended March 31, in thousands) | Account | 2024 ($K) | 2023 ($K) | | :--- | :--- | :--- | | Total Investment Income | $35,979 | $36,349 | | Net Expenses | $21,727 | $19,709 | | Net Investment Income | $14,252 | $16,640 | | Net Realized/Unrealized Gain (Loss) | $1,833 | $(11,768) | | Net Increase in Net Assets | $16,085 | $4,872 | | EPS (from operations) | $0.25 | $0.07 | | NII per Share | $0.22 | $0.26 | Corporate Information PennantPark Investment Corporation is a BDC investing in U.S. middle-market companies, managed by PennantPark Investment Advisers, LLC, with $7.2 billion in capital - The company is a BDC that invests primarily in U.S. middle-market companies via first and second lien secured debt, subordinated debt, and equity[36] - The company is managed by PennantPark Investment Advisers, LLC, which manages $7.2 billion of investable capital[37]