PennantPark Investment Corporation Announces Financial Results for the Quarter Ended March 31, 2025

MIAMI, May 12, 2025 (GLOBE NEWSWIRE) -- PennantPark Investment Corporation (NYSE: PNNT) announced today its financial results for the second quarter ended March 31, 2025.

HIGHLIGHTS       
Quarter ended March 31, 2025 (unaudited)
($ in millions, except per share amounts)

* excludes U.S. Government Securities

1. Includes investments in PennantPark Senior Loan Fund, LLC ("PSLF"), an unconsolidated joint venture, totaling $217.7 million, at fair value.

2. This is a non-GAAP financial measure. The Company believes that this number provides useful information to investors and management because it reflects the Company’s financial performance excluding the impact of unrealized gain on the Company's multi-currency, senior secured revolving credit facility with Truist Bank, as amended, the “Credit Facility." The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.

3. Core net investment income ("Core NII") is a non-GAAP financial measure. The Company believes that Core NII provides useful information to investors and management because it reflects the Company's financial performance excluding one-time or non-recurring investment income and expenses. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. For the quarter ended March 31, 2025, Core NII excluded: i) $0.3 million of credit facility amendment cost, and ii) $0.1 million of incentive fee expense offset.

CONFERENCE CALL AT 12:00 P.M. EST ON MAY 13, 2025

PennantPark Investment Corporation (“we,” “our,” “us” or the “Company”) will also host a conference call at 12:00 p.m. (Eastern Time) on Tuesday, May 13, 2025 to discuss its financial results. All interested parties are welcome to participate. You can access the conference call by dialing toll-free (888) 394-8218 approximately 5-10 minutes prior to the call. International callers should dial (646) 828-8193. All callers should reference conference ID #1509093 or PennantPark Investment Corporation. An archived replay will also be available on a webcast link located on the Quarterly Earnings page in the Investor section of PennantPark’s website.

PORTFOLIO AND INVESTMENT ACTIVITY 

“We are pleased that our secured loan portfolio, with among the lowest portfolio company leverage and most meaningful covenants in the industry, is positioned defensively and continues to perform well,” said Art Penn, Chairman and CEO. “Additionally, our dividend stream is supported by substantial spillover income as we look to rotate equity investments over time.”

As of March 31, 2025, our portfolio totaled $1,213.6 million and consisted of $503.0 million or 41% of first lien secured debt, $124.6 million or 10% of U.S. Government Securities, $17.9 million or 2% of second lien secured debt, $216.8 million or 18% of subordinated debt (including $140.3 million or 12% in PSLF) and $351.3 million or 29% of preferred and common equity (including $77.4 million or 6% in PSLF). Our interest bearing debt portfolio consisted of 91% variable-rate investments and 9% fixed-rate investments. As of March 31, 2025, we had three portfolio companies on non-accrual, representing 1.6% and 0.4% percent of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized appreciation of $40.7 million as of March 31, 2025. Our overall portfolio consisted of 158 companies with an average investment size of $6.9 million (excluding U.S. Government Securities), had a weighted average yield on interest bearing debt investments of 12.0%.

As of September 30, 2024, our portfolio totaled $1,328.1 million and consisted of $667.9 million or 50% of first lien secured debt, $99.6 million or 8% of U.S. Government Securities, $67.2 million or 5% of second lien secured debt, $181.7 million or 14% of subordinated debt (including $115.9 million or 9% in PSLF) and $311.7 million or 23% of preferred and common equity (including $67.9 million or 5% in PSLF). Our interest bearing debt portfolio consisted of 94% variable-rate investments and 6% fixed-rate investments. As of September 30, 2024, we had two portfolio companies on non-accrual, representing 4.1% and 2.3% of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized appreciation of $11.2 million as of September 30, 2024. Our overall portfolio consisted of 152 companies with an average investment size of $8.1 million (excluding U.S. Government Securities), had a weighted average yield on interest bearing debt investments of 12.3%.

For the three months ended March 31, 2025, we invested $176.8 million in three new and 52 existing portfolio companies with a weighted average yield on debt investments of 10.7% (excluding U.S. Government Securities). For the three months ended March 31, 2025, sales and repayments of investments totaled $263.1 million (including $154.4 million was sold to PSLF) which excludes U.S. Government Securities. For the six months ended March 31, 2025, we invested $472.5 million in 15 new and 96 existing portfolio companies with a weighted average yield on debt investments of 10.6% (excluding U.S. Government Securities). For the six months ended March 31, 2025, sales and repayments of investments totaled $616.8 million (including $441.0 million was sold to PSLF) which excludes U.S. Government Securities.

For the three months ended March 31, 2024, we invested $188.5 million in six new and 43 existing portfolio companies with a weighted average yield on debt investments of 11.7% (excluding U.S. Government Securities). For the three months ended March 31, 2024, sales and repayments of investments totaled $176.2 million (including $103.1 million was sold to PSLF) which excludes U.S. Government Securities. For the six months ended March 31, 2024, we invested $419.6 million in 18 new and 60 existing portfolio companies with a weighted average yield on debt investments of 11.8% (excluding U.S. Government Securities). For the six months ended March 31, 2024, sales and repayments of investments totaled $247.2 million (including $154.0 million was sold to PSLF) which excludes U.S. Government Securities.
  
PennantPark Senior Loan Fund, LLC

As of March 31, 2025, PSLF’s portfolio totaled $1,392.9 million, consisted of 119 companies with an average investment size of $11.7 million and had a weighted average yield interest bearing debt investments of 10.4%.

As of September 30, 2024, PSLF’s portfolio totaled $1,031.2 million, consisted of 102 companies with an average investment size of $10.1 million and had a weighted average yield interest bearing debt investments of 11.3%.

For the three months ended March 31, 2025, PSLF invested $169.9 million (including $154.4 million were purchased from the Company) in eight new and 14 existing portfolio companies at weighted average yield interest bearing debt investments of 10.1%. PSLF’s sales and repayments of investments for the same period totaled $48.3 million. For the six months ended March 31, 2025, PSLF invested $523.7 million (including $441.0 million were purchased from the Company) in 23 new and 57 existing portfolio companies at weighted average yield interest bearing debt investments of 10.4%. PSLF’s sales and repayments of investments for the same period totaled $157.4 million.

For the three months ended March 31, 2024, PSLF invested $113.2 million (including $103.1 million were purchased from the Company) in 11 new and five existing portfolio companies at weighted average yield on interest bearing debt investments of 11.8%. PSLF’s sales and repayments of investments for the same period totaled $49.7 million. For the six months ended March 31, 2024, PSLF invested $194.2 million (including $154.0 million were purchased from the Company) in 16 new and 11 existing portfolio companies at weighted average yield on interest bearing debt investments of 12.2%. PSLF’s sales and repayments of investments for the same period totaled $78.9 million.

RESULTS OF OPERATIONS

Set forth below are the results of operations for the three and six months ended March 31, 2025 and 2024.

Investment Income

For the three and six months ended March 31, 2025, investment income was $30.7 million and $64.9 million, respectively, which was attributable to $22.1 million and $47.3 million from first lien secured debt, $1.0 million and $3.0 million from second lien secured debt, $1.1 million and $2.2 million from subordinated debt and $6.5 million and $12.4 million from other investments, respectively. For the three and six months ended March 31, 2024, investment income was $36.0 million and $70.3 million, respectively, which was attributable to $27.8 million and $52.9 million from first lien secured debt, $2.8 million and $5.4 million from second lien secured debt, $0.1 million and $1.4 million from subordinated debt and $5.3 million and $10.6 million from preferred and common equity, respectively. The decrease in investment income for three and six months ended March 31, 2025, was primarily due to a decrease in our total portfolio size and a decrease in our weighted average yield on debt investments.

Expenses

For the three and six months ended March 31, 2025, expenses totaled $19.2 million and $40.4 million, respectively, and were comprised of $10.6 million and $22.4 million of debt related interest and expenses, $4.0 million and $8.3 million of base management fees, $2.4 million and $5.2 million of incentive fees, $1.6 million and $3.3 million of general and administrative expenses and $0.6 million and $1.3 million of provision for excise taxes, respectively. For the three and six months ended March 31, 2024, expenses totaled $21.7 million and $40.4 million, respectively, and were comprised of; $11.9 million and $21.4 million of debt-related interest and expenses, $4.1 million and $8.1 million of base management fees, $3.0 million and $6.3 million of incentive fees, $1.9 million and $3.3 million of general and administrative expenses and $0.8 million and $1.2 million of provision for excise taxes, respectively. The decrease in expenses for the three months ended March 31, 2025, was primarily due to decreases in interest and expenses on debt and incentive fees. Total expenses were flat for the six months ended March 31, 2025.

Net Investment Income

For the three and six months ended March 31, 2025, net investment income totaled $11.4 million and $24.4 million, or $0.18 per share and $0.37 per share, respectively. For the three and six months ended March 31, 2024, net investment income totaled $14.3 million and $29.9 million, or $0.22 per share and $0.46 per share, respectively. The decrease in net investment income was primarily due to a decrease in investment income and partially offset by a decrease in expenses.

Net Realized Gains or Losses

For the three and six months ended March 31, 2025, net realized gains (losses) totaled $(27.7) million and $(30.3) million, respectively. For the three and six months ended March 31, 2024, net realized gains (losses) totaled $(31.0) million and $(29.2) million, respectively. The change in realized gains (losses) was primarily due to changes in the market conditions of our investments and the values at which they were realized.

Unrealized Appreciation or Depreciation on Investments and Debt

For the three and six months ended March 31, 2025, we reported net change in unrealized appreciation (depreciation) on investments of $27.1 million and $29.5 million, respectively. For the three and six months ended March 31, 2024, we reported net change in unrealized appreciation (depreciation) on investments of $33.2 million and $28.3 million, respectively. As of March 31, 2025 and September 30, 2024, our net unrealized appreciation (depreciation) on investments totaled $40.7 million and $11.2 million, respectively. The net change in unrealized depreciation on our investments was primarily due to changes in the capital market conditions of our investments and the values at which they were realized.

For the three and six months ended March 31, 2025, the Truist Credit Facility had a net change in unrealized appreciation (depreciation) of $(1.4) million and $1.9 million, respectively. For the three and six months ended March 31, 2024, the Truist Credit Facility had a net change in unrealized appreciation (depreciation) of $0.5 million and $(1.6) million, respectively. As of March 31, 2025 and September 30, 2024, the net unrealized appreciation (depreciation) on the Truist Credit Facility totaled $3.0 million and $1.1 million, respectively. The net change in unrealized depreciation compared to the same periods in the prior period was primarily due to changes in the capital markets.

Net Change in Net Assets Resulting from Operations

For the three and six months ended March 31, 2025, net increase (decrease) in net assets resulting from operations totaled $9.5 million and $25.5 million or $0.14 per share and $0.39 per share, respectively. For the three and six months ended March 31, 2024, net increase (decrease) in net assets resulting from operations totaled $16.1 million and $26.7 million or $0.25 per share and $0.41 per share, respectively. The change in net assets from operations for the six months ended March 31, 2025 was primarily due to a change in the net realized and unrealized depreciation in the portfolio primarily driven by changes in market conditions and decrease in net investment income.

LIQUIDITY AND CAPITAL RESOURCES

Our liquidity and capital resources are derived primarily from cash flows from operations, including income earned, proceeds from investment sales and repayments and proceeds of securities offerings and debt financings. Our primary use of funds from operations includes investments in portfolio companies and payments of interest expense, fees and other operating expenses we incur. We have used, and expect to continue to use, our debt capital, proceeds from the rotation of our portfolio and proceeds from public and private offerings of securities to finance our investment objectives and operations.

As of March 31, 2025 and September 30, 2024, we had $314.5 million and $461.5 million, respectively, in outstanding borrowings under the Truist Credit Facility. The Truist Credit Facility had a weighted average interest rate of 6.7% and 7.2%, respectively, exclusive of the fee on undrawn commitment.  As of March 31, 2025 and September 30, 2024, we had $185.5 million and $13.5 million of unused borrowing capacity under the Truist Credit Facility, respectively, subject to leverage and borrowing base restrictions.

As of March 31, 2025 and September 30, 2024, we had cash and cash equivalents of $32.6 million and $49.9 million, respectively, available for investing and general corporate purposes. We believe our liquidity and capital resources are sufficient to allows us to effectively operate our business.

For the six months ended March 31, 2025, our operating activities provided cash of $161.1 million and our financing activities used cash of $178.3 million. Our operating activities provided cash primarily due to our investment activities and our financing activities used cash primarily for repayments of our credit facility and distributions paid to stockholders.

For the six months ended March 31, 2024, our operating activities used cash of $150.9 million and our financing activities provided cash of $147.5 million. Our operating activities used cash primarily due to our investment activities and our financing activities provided cash primarily from borrowings under the Truist Credit Facility.

DISTRIBUTIONS

During the three and six months ended March 31, 2025, we declared distributions of $0.24 and $0.48 per share, for total distributions of $15.7 million and $31.3 million, respectively. During the three and six months ended March 31, 2024, we declared distributions of $0.21 and $0.42 per share, for total distributions of $13.7 million and $27.4 million, respectively. We monitor available net investment income to determine if a return of capital for tax purposes may occur for the fiscal year. To the extent our taxable earnings fall below the total amount of our distributions for any given fiscal year, stockholders will be notified of the portion of those distributions deemed to be a tax return of capital. Tax characteristics of all distributions will be reported to stockholders subject to information reporting on Form 1099-DIV after the end of each calendar year and in our periodic reports filed with the SEC.

AVAILABLE INFORMATION

The Company makes available on its website its Quarterly Report on Form 10-Q filed with the SEC and stockholders may find the report on our website at www.pennantpark.com.

ABOUT PENNANTPARK INVESTMENT CORPORATION

PennantPark Investment Corporation, or the Company, is a business development company that invests primarily in U.S. middle-market companies in the form of first lien secured debt, second lien secured debt, subordinated debt and equity investments. PennantPark Investment Corporation is managed by PennantPark Investment Advisers, LLC.

ABOUT PENNANTPARK INVESTMENT ADVISERS, LLC

PennantPark Investment Advisers, LLC is a leading middle market credit platform, managing approximately $10 billion of investable capital, including available leverage. Since its inception in 2007, PennantPark Investment Advisers, LLC has provided investors access to middle market credit by offering private equity firms and their portfolio companies as well as other middle-market borrowers a comprehensive range of creative and flexible financing solutions. PennantPark Investment Advisers, LLC is headquartered in Miami and has offices in New York, Chicago, Houston, Los Angeles, and Amsterdam.

FORWARD-LOOKING STATEMENTS

This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You should understand that under Section 27A(b)(2)(B) of the Securities Act of 1933, as amended, and Section 21E(b)(2)(B) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 do not apply to forward-looking statements made in periodic reports PennantPark Investment Corporation files under the Exchange Act. All statements other than statements of historical facts included in this press release are forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in filings with the SEC. PennantPark Investment Corporation undertakes no duty to update any forward-looking statement made herein. You should not place undue influence on such forward-looking statements as such statements speak only as of the date on which they are made.

We may use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates” and similar expressions to identify forward-looking statements. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations.

The information contained herein is based on current tax laws, which may change in the future. The Company cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. The information provided in this material does not constitute any specific legal, tax or accounting advice. Please consult with qualified professionals for this type of advice.