Prospect Capital Announces Financial Results for Fiscal September 2024 Quarter

Core Viewpoint - Prospect Capital Corporation is adjusting its common shareholder distribution rate while focusing on its long-term income and total return strategy, emphasizing first lien senior secured middle market loans over structured credit CLO equity and real estate investments [2]. Financial Results - For the fiscal quarter ended September 30, 2024, the net investment income (NII) was $89,877,000, down from $125,612,000 in the same quarter of the previous year [12]. - NII per common share decreased to $0.21 from $0.31 year-over-year [12]. - Interest income as a percentage of total investment income increased to 94% from 85.7% year-over-year [12]. - The net income applicable to common shareholders was a loss of $165,069,000 compared to a profit of $94,011,000 in the same quarter last year [12]. Investment Strategy - The company is shifting its focus from CLO equity and real estate investments, which have shown higher variability, to more stable middle-market corporate investments [4]. - First lien senior secured loans now represent 65% of total investments, an increase of over 700 basis points year-over-year [5]. - The company expects to continue generating attractive risk-adjusted returns from its core business, with targeted unlevered total returns of 12-15%+ from current investments [8]. Portfolio and Asset Management - As of September 30, 2024, total investments at fair value were $7,476,641,000, with 117 portfolio companies [18]. - The weighted average EBITDA of middle-market loan portfolio companies was $104,682,000, with a weighted average net leverage ratio of 5.7x [18]. - The company has exited 15 subordinated structured note investments with an unlevered investment-level gross cash IRR of 12.0% [24]. Capital and Liquidity - The company has a diversified funding profile, including a $2.1 billion revolving credit facility with no debt maturing in 2024 [25][26]. - As of November 6, 2024, the balance sheet cash and undrawn revolving credit facility commitments totaled approximately $1.5 billion [25]. - The weighted average cost of unsecured debt financing was 4.42%, reflecting an increase from previous periods [30]. Shareholder Distributions - The company declared monthly cash distributions of $0.0450 per share for November 2024, December 2024, and January 2025 [14]. - Cumulative distributions to common shareholders since inception will total $21.25 per share, representing 2.6 times the September 2024 common NAV per share [15].