FINANCIAL RESULTS
All amounts in $000’s except per share amounts (on weighted average basis for period numbers) | Quarter Ended | Quarter Ended | Quarter Ended March 31, 2023 |
Net Investment Income (“NII”) | |||
NII per Common Share | |||
Interest as % of Total Investment Income | 91.0% | 92.3% | 92.1% |
Net Income (Loss) Applicable to Common Shareholders | |||
Net Income (Loss) per Common Share | |||
Distributions to Common Shareholders | |||
Distributions per Common Share | |||
Cumulative Paid and Declared Distributions to Common Shareholders(1) | |||
Cumulative Paid and Declared Distributions per Common Share(1) | |||
Total Assets | |||
Total Liabilities | |||
Preferred Stock | |||
Net Asset Value (“NAV”) to Common Shareholders | |||
NAV per Common Share | |||
Balance Sheet Cash + Undrawn Revolving Credit Facility Commitments | |||
Net of Cash Debt to Equity Ratio(2) | 46.2% | 46.2% | 47.1% |
Net of Cash Asset Coverage of Debt Ratio(2) | 315% | 316% | 311% |
Unsecured Debt + Preferred Equity as % of Total Debt + Preferred Equity | 77.7% | 78.4% | 76.7% |
Unsecured and Non-Recourse Debt as % of Total Debt | 100.0% | 100.0% | 100.0% |
All amounts in $000’s except per share amounts | Nine Months Ended | Nine Months Ended |
NII | ||
NII per Common Share | ||
Net Income (Loss) Applicable to Common Shareholders | ||
Net Income (Loss) per Common Share | ||
Distributions to Common Shareholders | ||
Distributions per Common Share |
(1) Declared dividends are through the
(2) Including our preferred stock as equity.
CASH COMMON SHAREHOLDER DISTRIBUTION DECLARATION
Prospect is declaring distributions to common shareholders as follows:
Monthly Cash Common Shareholder Distribution | Record Date | Payment Date | Amount ($ per share) |
These monthly cash distributions are the 81st, 82nd, 83rd, and 84th consecutive
Prospect expects to declare
Based on the declarations above, Prospect’s closing stock price of
Taking into account past distributions and our current share count for declared distributions, since inception through our
Since inception in 2004, Prospect has invested
Drivers focused on growing NII and NAV include (1) our
Our senior management team and employees own approximately 27% of all common shares outstanding or
PORTFOLIO UPDATE AND INVESTMENT ACTIVITY
All amounts in $000’s except per unit amounts | As of | As of | As of |
Total Investments (at fair value) | |||
Number of Portfolio Companies | 122 | 126 | 127 |
First Lien Debt | 59.0% | 58.7% | 54.4% |
Second Lien Debt | 14.6% | 15.5% | 17.6% |
Subordinated Structured Notes | 7.3% | 7.9% | 9.2% |
Unsecured Debt | 0.1% | 0.1% | 0.2% |
Equity Investments | 19.0% | 17.8% | 18.6% |
Mix of Investments with Underlying Collateral Security | 80.9% | 82.1% | 81.2% |
Annualized Current Yield – All Investments | 9.7% | 10.1% | 10.9% |
Annualized Current Yield – Performing Interest Bearing Investments | 12.1% | 12.3% | 13.4% |
Top Industry Concentration(1) | 18.4% | 17.8% | 18.1% |
Retail Industry Concentration(1) | 0.3% | 0.3% | 0.4% |
Energy Industry Concentration(1) | 1.4% | 1.4% | 1.7% |
Hotels, Restaurants & Leisure Concentration(1) | 0.3% | 0.2% | 0.3% |
Non-Accrual Loans as % of Total Assets(2) | 0.4% | 0.2% | 0.2% |
Middle-Market Loan Portfolio Company Weighted Average EBITDA(3) | |||
Middle-Market Loan Portfolio Company Weighted Average Net Leverage Ratio(3) | 5.5x | 5.4x | 5.3x |
(1) Excluding our underlying industry-diversified structured credit portfolio.
(2) Calculated at fair value.
(3) For additional disclosure see “Middle-Market Loan Portfolio Company Weighted Average EBITDA and Net Leverage” at the end of this release.
During the
All amounts in $000’s | Quarter Ended | Quarter Ended | Quarter Ended December 31, 2023 |
Total Originations | |||
Middle-Market Lending | 56.9% | 65.3% | 53.8% |
Real Estate | 43.1% | 29.0% | 30.2% |
Structured Notes | —% | —% | 5.5% |
Middle-Market Lending / Buyouts | —% | 5.6% | 10.5% |
Total Repayments and Sales | |||
Originations, Net of Repayments and Sales | |||
For additional disclosure see “Primary Origination Strategies” at the end of this release.
We have invested in subordinated structured notes benefiting from individual standalone financings non-recourse to Prospect, with our risk limited in each case to our net investment. We expect to continue to amortize our subordinated structured notes portfolio and to reinvest into middle market senior secured debt and selected equity investments. At
All amounts in $000’s except per unit amounts | As of | As of |
Total Subordinated Structured Notes | ||
Subordinated Structured Notes as % of Portfolio | 7.3% | 7.9% |
# of Investments(2) | 33 | 33 |
TTM Average Cash Yield(1)(2) | 22.1% | 20.0% |
Annualized GAAP Yield on Fair Value(1)(2) | 3.3% | 5.8% |
Cumulative Cash Distributions on Current Portfolio | ||
% of | 120.9% | 118.7% |
# of Underlying Collateral Loans | 1,540 | 1,580 |
(1) Calculation based on fair value.
(2) Excludes investments being redeemed.
To date we have exited 15 subordinated structured notes with an expected pooled average realized gross IRR of 12.0% and cash on cash multiple of 1.3 times.
CAPITAL AND LIQUIDITY
Our multi-year, long-term laddered and diversified historical funding profile has included a
The Facility includes a revolving period that extends through
Our total unfunded eligible commitments to portfolio companies totals approximately
As of | As of | |
All amounts in $000’s | ||
Net of Cash Debt to Equity Ratio(1) | 46.2% | 46.2% |
% of Interest-Bearing Assets at Floating Rates | 83.0% | 82.9% |
% of Fixed Rate Debt & Preferred Equity | 77.7% | 78.4% |
Balance Sheet Cash + Undrawn Revolving Credit Facility Commitments | ||
Unencumbered Assets | ||
% of Total Assets | 61.9% | 60.8% |
(1) Including our preferred stock as equity.
The below table summarizes our
All amounts in $000’s | Principal | Coupon | Maturity |
Debt Issuances | |||
Prospect Capital InterNotes® | 6.00% - 7.75% | ||
Total Debt Issuances | |||
Debt Repurchases/Repayments | |||
Prospect Capital InterNotes® | 1.50% - 5.50% | ||
6.375% 2024 Notes | 6.375% | ||
Total Debt Repurchases/Repayments | |||
Net Debt Repurchases/Repayments |
We currently have four separate unsecured debt issuances aggregating approximately
At
We have raised significant capital from our existing
In connection with our 5.50%, 6.50% and Floating Rate perpetual preferred stock offering programs we have adopted and amended a Preferred Stock Dividend Reinvestment Plan, pursuant to which (i) holders of the Floating Rate preferred stock will have dividends on their preferred stock reinvested in additional shares of such preferred stock at a price per share of
We currently have
Prospect holds recently reaffirmed investment grade company ratings from Standard & Poor’s (BBB-), Moody’s (Baa3), Kroll (BBB-), Egan-Jones (BBB), and DBRS (BBB (low)). Maintaining our investment grade ratings with prudent asset, liability, and risk management is an important objective for Prospect.
DIVIDEND REINVESTMENT PLAN
We have adopted a dividend reinvestment plan (also known as our “DRIP”) that provides for reinvestment of our distributions on behalf of our shareholders, unless a shareholder elects to receive cash. On
HOW TO PARTICIPATE IN OUR DIVIDEND REINVESTMENT PLAN
Shares held with a broker or financial institution
Many shareholders have been automatically “opted out” of our DRIP by their brokers. Even if you have elected to automatically reinvest your PSEC stock with your broker, your broker may have “opted out” of our DRIP (which utilizes DTC’s dividend reinvestment service), and you may therefore not be receiving the 5% pricing discount. Shareholders interested in participating in our DRIP to receive the 5% discount should contact their brokers to make sure each such DRIP participation election has been made through DTC. In making such DRIP election, each shareholder should specify to one’s broker the desire to participate in the "Prospect Capital Corporation DRIP through DTC" that issues shares based on 95% of the market price (a 5% discount to the market price) and not the broker's own "synthetic DRIP” plan (if any) that offers no such discount. Each shareholder should not assume one’s broker will automatically place such shareholder in our DRIP through DTC. Each shareholder will need to make this election proactively with one’s broker or risk not receiving the 5% discount. Each shareholder may also consult with a representative of such shareholder’s broker to request that the number of shares the shareholder wishes to enroll in our DRIP be re-registered by the broker in the shareholder’s own name as record owner in order to participate directly in our DRIP.
Shares registered directly with our transfer agent
If a shareholder holds shares registered in the shareholder’s own name with our transfer agent (less than 0.1% of our shareholders hold shares this way) and wants to make a change to how the shareholder receives dividends, please contact our plan administrator,
EARNINGS CONFERENCE CALL
Prospect will host an earnings call on
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (in thousands, except share and per share data) | |||||
(Unaudited) | (Audited) | ||||
Assets | |||||
Investments at fair value: | |||||
Control investments (amortized cost of | $ | 3,814,119 | $ | 3,571,697 | |
Affiliate investments (amortized cost of | 13,805 | 10,397 | |||
Non-control/non-affiliate investments (amortized cost of | 3,978,788 | 4,142,837 | |||
Total investments at fair value (amortized cost of | 7,806,712 | 7,724,931 | |||
Cash and cash equivalents (restricted cash of | 53,480 | 95,646 | |||
Receivables for: | |||||
Interest, net | 30,652 | 22,701 | |||
Other | 1,169 | 1,051 | |||
Deferred financing costs on Revolving Credit Facility | 13,019 | 15,569 | |||
Due from broker | — | 617 | |||
Prepaid expenses | 588 | 1,149 | |||
Due from Affiliate | 174 | 2 | |||
Total Assets | 7,905,794 | 7,861,666 | |||
Liabilities | |||||
Revolving Credit Facility | 906,376 | 1,014,703 | |||
Public Notes (less unamortized discount and debt issuance costs of | 986,411 | 1,064,137 | |||
Prospect Capital InterNotes® (less unamortized debt issuance costs of | 435,550 | 351,417 | |||
Convertible Notes (less unamortized discount and debt issuance costs of | 155,283 | 154,591 | |||
Due to | 56,608 | 61,651 | |||
Dividends payable | 25,274 | 31,033 | |||
Interest payable | 20,627 | 22,684 | |||
Accrued expenses | 3,287 | 4,926 | |||
Due to | 5,325 | 4,066 | |||
Due to broker | 8,904 | 94 | |||
Due to Affiliate | — | 161 | |||
Other liabilities | 166 | 1,524 | |||
Total Liabilities | 2,603,811 | 2,710,987 | |||
Commitments and Contingencies | |||||
Preferred Stock, par value | 1,559,764 | 1,418,014 | |||
Net Assets Applicable to Common Shares | $ | 3,742,219 | $ | 3,732,665 | |
Components of Net Assets Applicable to Common Shares and Net Assets, respectively | |||||
Common stock, par value | 416 | 404 | |||
Paid-in capital in excess of par | 4,198,655 | 4,123,586 | |||
Total distributable (loss) | (456,852) | (391,325) | |||
Net Assets Applicable to Common Shares | $ | 3,742,219 | $ | 3,732,665 | |
Net Asset Value Per Common Share | $ | 8.99 | $ | 9.24 |
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) (Unaudited) | |||||||||||
Three Months Ended | Nine Months Ended | ||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||
Investment Income | |||||||||||
Interest income: | |||||||||||
Control investments | $ | 68,505 | $ | 64,496 | $ | 210,272 | $ | 187,579 | |||
Affiliate investments | — | — | — | 15,034 | |||||||
Non-control/non-affiliate investments | 110,679 | 109,601 | 340,421 | 287,735 | |||||||
Structured credit securities | 4,748 | 24,039 | 30,317 | 72,982 | |||||||
Total interest income | 183,932 | 198,136 | 581,010 | 563,330 | |||||||
Dividend income: | |||||||||||
Control investments | 510 | 800 | 737 | 3,157 | |||||||
Affiliate investments | — | — | 1,307 | 1,374 | |||||||
Non-control/non-affiliate investments | 1,469 | 1,128 | 4,334 | 2,515 | |||||||
Total dividend income | 1,979 | 1,928 | 6,378 | 7,046 | |||||||
Other income: | |||||||||||
Control investments | 14,192 | 14,768 | 55,553 | 50,463 | |||||||
Affiliate investments | — | — | — | 133 | |||||||
Non-control/non-affiliate investments | 2,112 | 288 | 6,461 | 9,738 | |||||||
Total other income | 16,304 | 15,056 | 62,014 | 60,334 | |||||||
Total Investment Income | 202,215 | 215,120 | 649,402 | 630,710 | |||||||
Operating Expenses | |||||||||||
Base management fee | 39,218 | 38,980 | 117,594 | 116,176 | |||||||
Income incentive fee | 17,390 | 20,561 | 61,332 | 64,692 | |||||||
Interest and credit facility expenses | 39,841 | 37,517 | 120,478 | 109,170 | |||||||
Allocation of overhead from | 5,708 | 9,773 | 20,073 | 16,490 | |||||||
Audit, compliance and tax related fees | 583 | 1,495 | 2,079 | 4,032 | |||||||
Directors’ fees | 150 | 131 | 416 | 393 | |||||||
Other general and administrative expenses | 4,950 | 4,483 | 10,516 | 11,607 | |||||||
Total Operating Expenses | 107,840 | 112,940 | 332,488 | 322,560 | |||||||
Net Investment Income | 94,375 | 102,180 | 316,914 | 308,150 | |||||||
Net Realized and Net Change in Unrealized Gains (Losses) from Investments | |||||||||||
Net realized gains (losses) | |||||||||||
Control investments | 1,186 | (800) | 1,039 | (2,512) | |||||||
Affiliate investments | — | — | — | 16,143 | |||||||
Non-control/non-affiliate investments | (70,949) | (31,413) | (278,168) | (52,723) | |||||||
Net realized gains (losses) | (69,763) | (32,213) | (277,129) | (39,092) | |||||||
Net change in unrealized (losses) gains | |||||||||||
Control investments | 125,827 | (41,162) | 8,592 | (109,909) | |||||||
Affiliate investments | (487) | — | 2,101 | (89,034) | |||||||
Non-control/non-affiliate investments | (5,523) | (117,761) | 183,012 | (179,153) | |||||||
Net change in unrealized (losses) gains | 119,817 | (158,923) | 193,705 | (378,096) | |||||||
Net Realized and Net Change in Unrealized (Losses) Gains from Investments | 50,054 | (191,136) | (83,424) | (417,188) | |||||||
Net realized losses on extinguishment of debt | (68) | (58) | (212) | (138) | |||||||
Net Increase (Decrease) in Net Assets Resulting from Operations | 144,361 | (89,014) | 233,278 | (109,176) | |||||||
Preferred Stock dividends | (24,812) | (19,933) | (72,033) | (49,347) | |||||||
Net (loss) gain on redemptions of Preferred Stock | (925) | — | (46) | — | |||||||
(Loss) on Accretion to Redemption Value of Preferred Stock | (4,733) | — | (4,733) | — | |||||||
Net Increase (Decrease) in Net Assets Resulting from Operations applicable to Common Stockholders | $ | 113,891 | $ | (108,947) | $ | 156,466 | $ | (158,523) |
PROSPECT CAPITAL CORPORATION AND SUBSIDIARIES ROLLFORWARD OF NET ASSET VALUE PER COMMON SHARE (in actual dollars) | |||||||||||
Three Months Ended | Nine Months Ended | ||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||
Per Share Data | |||||||||||
Net asset value per common share at beginning of period | $ | 8.92 | $ | 9.94 | $ | 9.24 | $ | 10.48 | |||
Net investment income(1) | 0.23 | 0.26 | 0.77 | 0.78 | |||||||
Net realized and net change in unrealized gains (losses)(1) | 0.11 | (0.48) | (0.22) | (1.05) | |||||||
Net increase (decrease) from operations | 0.34 | (0.22) | 0.56 | (0.27) | |||||||
Distributions of net investment income to preferred stockholders | (0.06) | (3) | (0.05) | (0.18) | (3) | (0.12) | |||||
Distributions of capital gains to preferred stockholders | — | (3) | — | — | (3) | — | |||||
Net increase (decrease) from operations applicable to common stockholders(4) | 0.27 | (0.27) | 0.38 | (0.40) | |||||||
Distributions of net investment income to common stockholders | (0.18) | (3) | (0.18) | (0.54) | (3) | (0.52) | |||||
Distributions of capital gains to common stockholders | — | (3) | — | — | (3) | (0.02) | |||||
Common stock transactions(2) | (0.03) | (0.01) | (0.09) | (0.07) | |||||||
Net asset value per common share at end of period | $ | 8.99 | $ | 9.48 | $ | 8.99 | $ | 9.48 |
(1) Per share data amount is based on the basic weighted average number of common shares outstanding for the year/period presented (except for dividends to stockholders which is based on actual rate per share). Realized gains (losses) is inclusive of net realized losses (gains) on investments, realized losses from extinguishment of debt and realized gains (losses) from the repurchases and redemptions of preferred stock.
(2) Common stock transactions include the effect of our issuance of common stock in public offerings (net of underwriting and offering costs), shares issued in connection with our common stock dividend reinvestment plan, common shares issued to acquire investments and common shares repurchased below net asset value pursuant to our Repurchase Program, and common shares issued pursuant to the Holder Optional Conversion of our 5.50% and 6.50% Preferred Stock.
(3) Tax character of distributions is not yet finalized for the respective fiscal period.
(4) Diluted net increase from operations applicable to common stockholders was
MIDDLE-MARKET LOAN PORTFOLIO COMPANY WEIGHTED AVERAGE EBITDA AND
Middle-Market Loan Portfolio Company Weighted Average Net Leverage (“Middle-Market Portfolio Net Leverage”) and Middle-Market Loan Portfolio Company Weighted Average EBITDA (“Middle-Market Portfolio EBITDA”) provide clarity into the underlying capital structure of PSEC’s middle-market loan portfolio investments and the likelihood that such portfolio will make interest payments and repay principal.
Middle-Market Portfolio Net Leverage reflects the net leverage of each of PSEC’s middle-market loan portfolio company debt investments, weighted based on the current fair market value of such debt investments. The net leverage for each middle-market loan portfolio company is calculated based on PSEC’s investment in the capital structure of such portfolio company, with a maximum limit of 10.0x adjusted EBITDA. This calculation excludes debt subordinate to PSEC’s position within the capital structure because PSEC’s exposure to interest payment and principal repayment risk is limited beyond that point. Additionally, subordinated structured notes, rated secured structured notes, real estate investments, investments for which EBITDA is not available, and equity investments, for which principal repayment is not fixed, are also not included in the calculation. The calculation does not exceed 10.0x adjusted EBITDA for any individual investment because 10.0x captures the highest level of risk to PSEC. Middle-Market Portfolio Net Leverage provides PSEC with some guidance as to PSEC’s exposure to the interest payment and principal repayment risk of PSEC’s middle-market loan portfolio. PSEC monitors its Middle-Market Portfolio Net Leverage on a quarterly basis.
Middle-Market Portfolio EBITDA is used by PSEC to supplement Middle-Market Portfolio Net Leverage and generally indicates a portfolio company’s ability to make interest payments and repay principal. Middle-Market Portfolio EBITDA is calculated using the EBITDA of each of PSEC’s middle-market loan portfolio companies, weighted based on the current fair market value of the related investments. The calculation provides PSEC with insight into profitability and scale of the portfolio companies within PSEC's middle-market loan portfolio.
These calculations include addbacks that are typically negotiated and documented in the applicable investment documents, including but not limited to transaction costs, share-based compensation, management fees, foreign currency translation adjustments, and other nonrecurring transaction expenses.
Together, Middle-Market Portfolio Net Leverage and Middle-Market Portfolio EBITDA assist PSEC in assessing the likelihood that PSEC will timely receive interest and principal payments. However, these calculations are not meant to substitute for an analysis of PSEC’s underlying portfolio company debt investments, but to supplement such analysis.
PRIMARY ORIGINATION STRATEGIES
Lending to Companies - We make directly-originated, agented loans to companies, including companies which are controlled by private equity sponsors and companies that are not controlled by private equity sponsors (such as companies that are controlled by the management team, the founder, a family or public shareholders). This debt can take the form of first lien, second lien, unitranche or unsecured loans. These loans typically have equity subordinate to our loan position. We may also purchase selected equity co-investments in such companies. In addition to directly-originated, agented loans, we also invest in senior and secured loans, syndicated loans and high yield bonds that have been sold to a club or syndicate of buyers, both in the primary and secondary markets. These investments are often purchased with a long term, buy-and-hold outlook, and we often look to provide significant input to the transaction by providing anchoring orders.
Lending to Companies and Purchasing Controlling Equity Positions in Such Companies - This strategy involves purchasing senior and secured yield-producing debt and controlling equity positions in middle-market companies across various industries. We believe this strategy provides enhanced certainty of closing to sellers, and the opportunity for management to continue in their current roles. These investments are often structured in tax-efficient partnerships, enhancing returns.
Purchasing Controlling Equity Positions and Lending to Real Estate Companies - We purchase debt and controlling equity positions in tax-efficient real estate investment trusts (“REIT” or “REITs”). The real estate investments of
Investing in Structured Credit - We make investments in structured credit, often taking a significant position in subordinated structured notes (equity) and rated secured structured notes (debt). The underlying portfolio of each structured credit investment is diversified across approximately 100 to 200 broadly syndicated loans and does not have direct exposure to real estate, mortgages, or consumer-based credit assets. The structured credit portfolios in which we invest are managed by established collateral management teams with many years of experience in the industry.
ABOUT
We have elected to be treated as a business development company under the Investment Company Act of 1940 (“1940 Act”). We are required to comply with regulatory requirements under the 1940 Act as well as applicable NASDAQ, federal, and state rules and regulations. We have elected to be treated as a regulated investment company under the Internal Revenue Code of 1986.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, whose safe harbor for forward-looking statements does not apply to business development companies. Any such statements, other than statements of historical fact, are highly likely to be affected by other unknowable future events and conditions, including elements of the future that are or are not under our control, and that we may or may not have considered; accordingly, such statements cannot be guarantees or assurances of any aspect of future performance. Actual developments and results are highly likely to vary materially from any forward-looking statements. Such statements speak only as of the time when made. We undertake no obligation to update any such statement now or in the future.
For additional information, contact:
grier@prospectcap.com
Telephone (212) 448-0702
Source:
2024 GlobeNewswire, Inc., source