Prospect Capital Corporation (NASDAQ: PSEC) (“Prospect”, “our”, or
“we”) today announced financial results for our fiscal quarter
ended March 31, 2024.
FINANCIAL RESULTS
All amounts in $000’s exceptper share amounts (on weighted
averagebasis for period numbers) |
Quarter EndedMarch 31, 2024 |
Quarter EndedDecember 31, 2023 |
Quarter EndedMarch 31, 2023 |
|
|
|
|
Net Investment Income (“NII”) |
$94,375 |
$96,927 |
$102,180 |
NII per Common Share |
$0.23 |
$0.24 |
$0.26 |
Interest as % of Total Investment Income |
91.0% |
92.3% |
92.1% |
|
|
|
|
Net Income (Loss) Applicable to Common Shareholders |
$113,891 |
$(51,436) |
$(108,947) |
Net Income (Loss) per Common Share |
$0.27 |
$(0.13) |
$(0.27) |
|
|
|
|
Distributions to Common Shareholders |
$74,685 |
$74,056 |
$72,009 |
Distributions per Common Share |
$0.18 |
$0.18 |
$0.18 |
Cumulative Paid and Declared Distributions to Common
Shareholders(1) |
$4,263,149 |
$4,162,509 |
$3,964,645 |
Cumulative Paid and Declared Distributions per Common Share(1) |
$21.00 |
$20.76 |
$20.28 |
|
|
|
|
Total Assets |
$7,905,794 |
$7,781,214 |
$7,701,533 |
Total Liabilities |
$2,603,811 |
$2,596,824 |
$2,574,479 |
Preferred Stock |
$1,559,764 |
$1,500,741 |
$1,327,760 |
Net Asset Value (“NAV”) to Common Shareholders |
$3,742,219 |
$3,683,649 |
$3,799,294 |
NAV per Common Share |
$8.99 |
$8.92 |
$9.48 |
|
|
|
|
Balance Sheet Cash + Undrawn Revolving Credit Facility
Commitments |
$1,101,604 |
$1,187,740 |
$954,187 |
|
|
|
|
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 exceptper share amounts |
Nine Months Ended |
Nine Months Ended |
March 31, 2024 |
March 31, 2023 |
|
|
|
NII |
$316,914 |
$308,150 |
NII per Common Share |
$0.77 |
$0.78 |
|
|
|
Net Income (Loss) Applicable to Common Shareholders |
$156,466 |
$(158,523) |
Net Income (Loss) per Common Share |
$0.38 |
$(0.40) |
|
|
|
Distributions to Common Shareholders |
$221,993 |
$214,751 |
Distributions per Common Share |
$0.54 |
$0.54 |
(1) Declared dividends are through
the August 2024 distribution. June through August 2024
distributions are estimated based on shares outstanding as of
4/29/2024.(2) Including our preferred stock as
equity.CASH COMMON SHAREHOLDER DISTRIBUTION
DECLARATION
Prospect is declaring distributions to common
shareholders as follows:
Monthly Cash Common Shareholder Distribution |
Record Date |
Payment Date |
Amount ($ per share) |
May 2024 |
5/29/2024 |
6/18/2024 |
$0.0600 |
June 2024 |
6/26/2024 |
7/18/2024 |
$0.0600 |
July 2024 |
7/29/2024 |
8/21/2024 |
$0.0600 |
August 2024 |
8/28/2024 |
9/19/2024 |
$0.0600 |
These monthly cash distributions are the 81st,
82nd, 83rd, and 84th consecutive $0.06 per share distributions to
common shareholders.
Prospect expects to declare September 2024 and
October 2024 distributions to common shareholders in August
2024.
Based on the declarations above, Prospect’s
closing stock price of $5.26 at May 7, 2024 delivers to our common
shareholders an annualized distribution yield of 13.7%.
Taking into account past distributions and our
current share count for declared distributions, since inception
through our August 2024 declared distribution, Prospect will have
distributed $21.00 per share to original common shareholders,
representing 2.3 times March 2024 common NAV per share, aggregating
approximately $4.3 billion in cumulative distributions to all
common shareholders.
Since inception in 2004, Prospect has invested
$20.7 billion across 421 investments, exiting 292 of these
investments.
Drivers focused on growing NII and NAV include
(1) our $2.25 billion targeted 6.50% and Floating Rate perpetual
preferred stock offerings, (2) greater utilization of our cost
efficient revolving floating rate credit facility, (3) elevated
short-term SOFR rates based on Fed tightening to boost asset
yields, (4) optimization of portfolio company performance, and (5)
increased primary and secondary originations of senior secured debt
and selected equity investments targeting attractive risk-adjusted
yields and total returns as we deploy dry powder from our
underleveraged balance sheet.
Our senior management team and employees own
approximately 27% of all common shares outstanding or $1.0 billion
of our common equity as measured at NAV.
PORTFOLIO UPDATE AND INVESTMENT
ACTIVITY
All amounts in $000’s exceptper unit amounts |
As of |
As of |
As of |
March 31, 2024 |
December 31, 2023 |
March 31, 2023 |
|
|
|
|
Total Investments (at fair value) |
$7,806,712 |
$7,631,846 |
$7,592,777 |
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) |
$106,394 |
$109,719 |
$113,841 |
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 June 2024 (to date), March 2024, and
December 2023 quarters, investment originations and repayments were
as follows:
All amounts in $000’s |
Quarter EndedJune 30, 2024 (to date) |
Quarter EndedMarch 31, 2024 |
Quarter EndedDecember 31, 2023 |
|
|
|
|
Total Originations |
$28,985 |
$219,515 |
$171,727 |
|
|
|
|
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 |
$54,656 |
$114,472 |
$131,332 |
|
|
|
|
Originations, Net of Repayments and Sales |
$(25,671) |
$105,043 |
$40,395 |
|
|
|
|
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 March 31, 2024 and December 31,
2023, our subordinated structured note portfolio at fair value
consisted of the following:
All amounts in $000’s exceptper unit amounts |
As of |
As of |
March 31, 2024 |
December 31, 2023 |
|
|
|
Total Subordinated Structured Notes |
$572,486 |
$601,491 |
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 |
$1,480,668 |
$1,453,432 |
% of Original Investment |
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 $2.04 billion
revolving credit facility (with 53 current lenders), program notes,
institutional bonds, convertible bonds, listed preferred stock, and
program preferred stock. We have retired multiple upcoming
maturities and, as of today, have no debt maturing during calendar
year 2024. The combined amount of our balance sheet cash and
undrawn revolving credit facility commitments is currently $1.1
billion. On April 22, 2024, we increased the accordion limit of our
Revolving Credit Facility (the "Facility) to $2.25 billion, with
two existing lenders upsizing commitments in the current June 2024
quarter.
The Facility includes a revolving period that
extends through September 15, 2026, followed by an additional
one-year amortization period. Pricing for amounts drawn under the
Facility is one-month SOFR plus 2.05%. The Facility includes a
revolving period that extends through September 15, 2026, followed
by an additional one-year amortization period. Pricing for amounts
drawn under the Facility is one-month SOFR plus 2.05%.
Our total unfunded eligible commitments to
portfolio companies totals approximately $25 million, or 0.3% of
our total assets as of March 31, 2024.
|
As of |
As of |
All amounts in $000’s |
March 31, 2024 |
December 31, 2023 |
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 |
$1,101,604 |
$1,187,740 |
|
|
|
Unencumbered Assets |
$4,891,134 |
$4,727,197 |
% of Total Assets |
61.9% |
60.8% |
(1) Including our preferred
stock as equity.
The below table summarizes our March 2024 quarter
term debt issuance and repurchase/repayment activity:
All amounts in $000’s |
Principal |
Coupon |
Maturity |
Debt Issuances |
|
|
|
Prospect Capital InterNotes® |
$55,573 |
6.00% - 7.75% |
January 2027 – March 2034 |
Total Debt Issuances |
$55,573 |
|
|
|
|
|
|
Debt Repurchases/Repayments |
|
|
|
Prospect Capital InterNotes® |
$3,627 |
1.50% - 5.50% |
January 2024 – September 2051 |
6.375% 2024 Notes |
$81,240 |
6.375% |
January 2024 |
Total Debt Repurchases/Repayments |
$84,867 |
|
|
|
|
|
|
Net Debt Repurchases/Repayments |
$(29,294) |
|
|
We currently have four separate unsecured debt
issuances aggregating approximately $1.2 billion outstanding, not
including our program notes, with laddered maturities extending
through October 2028. At March 31, 2024, $443.0 million of program
notes were outstanding with laddered maturities through March
2052.
At March 31, 2024, our weighted average cost of
unsecured debt financing was 4.14%, a decrease of 0.01% from
December 31, 2023, and a increase of 0.07% from March 31, 2023.
We have raised significant capital from our
existing $2.25 billion 5.50%, 6.50% and Floating Rate perpetual
preferred stock offering programs. The preferred stock provides
Prospect with a diversified source of programmatic capital without
creating scheduled maturity risk due to the perpetual term of
multiple preferred tranches. To date we have issued over $1.6
billion of our 6.50%, 5.50% and Floating Rate perpetual preferred
stock programs (including $69.4 million in the March 2024 quarter
and, to date, $28.7 million in the current June 2024 quarter) and
approximately $1.8 billion in total preferred stock when including
our $150 million listed 5.35% perpetual preferred stock
offering.
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 $25.00 and (ii)
holders of the 5.50% and 6.50% preferred stock will have dividends
on their preferred stock reinvested in additional shares of such
preferred stock at a 5% discount to the stated value per share of
$25.00, if they elect.
We currently have $1.7 billion in preferred stock
outstanding.
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 April 17, 2020, our board of directors
approved amendments to the Company’s DRIP, effective May 21, 2020.
These amendments principally provide for the number of newly-issued
shares pursuant to the DRIP to be determined by dividing (i) the
total dollar amount of the distribution payable by (ii) 95% of the
closing market price per share of our stock on the valuation date
of the distribution (providing a 5% discount to the market price of
our common stock), a benefit to shareholders who participate.
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, American Stock Transfer and Trust Company LLC by
calling (888) 888-0313 or by mailing Equiniti Trust Company LLC, PO
Box 500, Newark, New Jersey 17101.
EARNINGS CONFERENCE CALL
Prospect will host an earnings call on Thursday May
9, 2024 at 10:30 a.m. Eastern Time. Dial
888-338-7333. For a replay prior to May 9, 2024
visit www.prospectstreet.com or call 877-344-7529 with passcode
4926482.
|
|
PROSPECT CAPITAL CORPORATION AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF ASSETS AND
LIABILITIES(in thousands, except share and per
share data) |
|
|
March 31, 2024 |
|
June 30, 2023 |
|
(Unaudited) |
|
(Audited) |
Assets |
|
|
|
Investments at fair value: |
|
|
|
Control investments (amortized cost of $3,222,326 and $2,988,496,
respectively) |
$ |
3,814,119 |
|
$ |
3,571,697 |
Affiliate investments (amortized cost of $10,162 and $8,855,
respectively) |
13,805 |
|
10,397 |
Non-control/non-affiliate investments (amortized cost of $4,456,184
and $4,803,245, respectively) |
3,978,788 |
|
4,142,837 |
Total investments at fair value (amortized cost of $7,688,672
and $7,800,596, respectively) |
7,806,712 |
|
7,724,931 |
Cash and cash equivalents (restricted cash of $4,532 and $5,074,
respectively) |
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
$13,589 and $17,103, respectively) |
986,411 |
|
1,064,137 |
Prospect Capital InterNotes® (less unamortized debt issuance costs
of $7,403 and $6,688, respectively) |
435,550 |
|
351,417 |
Convertible Notes (less unamortized discount and debt issuance
costs of $885 and $1,577, respectively) |
155,283 |
|
154,591 |
Due to Prospect Capital Management |
56,608 |
|
61,651 |
Dividends payable |
25,274 |
|
31,033 |
Interest payable |
20,627 |
|
22,684 |
Accrued expenses |
3,287 |
|
4,926 |
Due to Prospect Administration |
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
$0.001 per share (647,900,000 and 447,900,000 shares of preferred
stock authorized, with 80,000,000 and 72,000,000 as Series A1,
80,000,000 and 72,000,000 as Series M1, 80,000,000 and 72,000,000
as Series M2, 20,000,000 and 20,000,000 as Series AA1, 20,000,000
and 20,000,000 as Series MM1, 1,000,000 and 1,000,000 as Series A2,
6,900,000 and 6,900,000 as Series A, 80,000,000 and 72,000,000 as
Series A3, 80,000,000 and 72,000,000 as Series M3, 80,000,000 and 0
as Series A4, 80,000,000 and 0 as Series M4, 20,000,000 and
20,000,000 as Series AA2, and 20,000,000 and 20,000,000 as Series
MM2, each as of March 31, 2024 and June 30, 2023; 30,349,874 and
30,965,138 Series A1 shares issued and outstanding, 2,426,875 and
3,681,591 Series M1 shares issued and outstanding, 0 and 0 Series
M2 shares issued and outstanding, 0 and 0 Series AA1 shares issued
and outstanding, 0 and 0 Series MM1 shares issued and outstanding,
164,000 and 164,000 Series A2 shares issued and outstanding,
5,251,157 and 5,962,654 Series A shares issued and outstanding,
24,626,831 and 18,829,837 Series A3 shares issued and outstanding,
3,731,923 and 2,498,788 Series M3 shares issued and outstanding,
245,410 and 0 Series M4 shares issued and outstanding, 1,580,468
and 0 Series A4 issued and outstanding, 0 and 0 Series AA2 shares
issued and outstanding, and 0 and 0 Series MM2 shares issued and
outstanding as of March 31, 2024 and June 30, 2023, respectively)
at carrying value plus cumulative accrued and unpaid dividends |
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 $0.001
per share (1,352,100,000 and 1,552,100,000 common shares
authorized; 416,150,886 and 404,033,549 issued and outstanding,
respectively) |
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
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS(in thousands, except share and per
share data)(Unaudited) |
|
|
|
|
Three Months Ended March 31, |
Nine Months Ended March 31, |
|
|
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 Prospect Administration |
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
SUBSIDIARIESROLLFORWARD OF NET ASSET VALUE PER
COMMON SHARE(in actual dollars) |
|
|
Three Months Ended March 31, |
|
Nine Months Ended March 31, |
|
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 $0.20 for the
three months ended March 31, 2024. Diluted net decrease from
operations applicable to common stockholders was $0.27 for the
three months ended March 31, 2023. Diluted net increase from
operations applicable to common stockholders was $0.33 for the nine
months ended March 31, 2024. Diluted net decrease from operations
applicable to common stockholders was $0.40 for the nine months
ended March 31, 2023.
MIDDLE-MARKET LOAN PORTFOLIO COMPANY
WEIGHTED AVERAGE EBITDA AND NET LEVERAGE
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 National
Property REIT Corp. (“NPRC”) are in various classes of developed
and occupied real estate properties that generate current yields,
including multi-family properties, student housing, and senior
living. NPRC seeks to identify properties that have historically
attractive occupancy rates and recurring cash flow generation. NPRC
generally co-invests with established and experienced property
management teams that manage such properties after acquisition.
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 PROSPECT CAPITAL
CORPORATION
Prospect Capital Corporation
(www.prospectstreet.com) is a business development company that
focuses on lending to and investing in private businesses. Our
investment objective is to generate both current income and
long-term capital appreciation through debt and equity
investments.
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 Eliasek, President and Chief Operating
Officergrier@prospectcap.comTelephone (212) 448-0702
Prospect Capital (NASDAQ:PSEC)
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Prospect Capital (NASDAQ:PSEC)
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