NEW YORK, NY -- (Marketwired - May 08, 2014) - PennantPark Floating Rate Capital Ltd. (NASDAQ: PFLT) announced today financial results for the second fiscal quarter ended March 31, 2014.
HIGHLIGHTS
Quarter ended March 31, 2014
($ in millions, except per share amounts)
Assets and Liabilities: Investment portfolio $ 389.2 Net assets $ 215.4 Net asset value per share $ 14.46 Credit Facility (cost $173.2) $ 173.2 Yield on debt investments at quarter-end 8.1% Operating Results: Net investment income $ 3.7 GAAP net investment income per share $ 0.25 Capital gain incentive fee accrued but not payable per share $ 0.03 Core net investment income per share (1) $ 0.28 Distributions declared per share $ 0.27 Portfolio Activity: Purchases of investments $ 50.4 Sales and repayments of investments $ 35.7 Number of new portfolio companies invested 8 Number of existing portfolio companies invested 7 Number of portfolio companies at quarter-end 87
(1) Core net investment income is a non-GAAP financial measure. The Company believes that core net investment income provides useful information to investors and management because it reflects the Company's financial performance excluding the charges related to incentive fee on net unrealized gains accrued under GAAP but not payable unless such net unrealized gains are realized. 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.
CONFERENCE CALL AT 10:00 A.M. ET ON MAY 9, 2014
PennantPark Floating Rate Capital Ltd. ("we," "our," "us" or "Company") will host a conference call at 10:00 a.m. (Eastern Time) on Friday, May 9, 2014 to discuss its financial results. All interested parties are welcome to participate. You can access the conference call by dialing (888) 576-4398 approximately 5-10 minutes prior to the call. International callers should dial (719) 325-2361. All callers should reference PennantPark Floating Rate Capital Ltd. An archived replay of the call will be available through May 23, 2014 by calling (888) 203-1112. International callers please dial (719) 457-0820. For all phone replays, please reference conference ID #5690285.
PORTFOLIO AND INVESTMENT ACTIVITY
As of March 31, 2014, our portfolio totaled $389.2 million and consisted of $342.2 million of senior secured loans, $32.6 million of second lien secured debt, $12.7 million of subordinated debt and $1.7 million of preferred and common equity investments. Our debt portfolio consisted of 94% variable-rate investments (including 92% with a London Interbank Offered Rate, or LIBOR, or prime floor) and 6% fixed-rate investments. Overall, the portfolio had unrealized appreciation of $3.8 million. Our overall portfolio consisted of 87 companies with an average investment size of $4.5 million, had a weighted average yield on debt investments of 8.1%, and was invested 88% in senior secured loans, 8% in second lien secured debt, 3% in subordinated debt and 1% in preferred and common equity investments.
As of September 30, 2013, our portfolio totaled $317.8 million and consisted of $281.0 million of senior secured loans, $27.5 million of second lien secured debt and $9.3 million of subordinated debt, preferred and common equity investments. Our debt portfolio consisted of 92% variable-rate investments (including 89% with a LIBOR or prime floor) and 8% fixed-rate investments. Overall, the portfolio had unrealized depreciation of $1.5 million. Our overall portfolio consisted of 83 companies with an average investment size of $3.8 million, had a weighted average yield on debt investments of 8.1%, and was invested 88% in senior secured loans, 9% in second lien secured debt and 3% in subordinated debt, preferred and common equity investments.
For the three months ended March 31, 2014, we invested $50.4 million in eight new and seven existing portfolio companies with a weighted average yield on debt investments of 8.3%. Sales and repayments of investments for the three months ended March 31, 2014 totaled $35.7 million. For the six months ended March 31, 2014, we invested $154.3 million in 25 new and 18 existing portfolio companies with a weighted average yield on debt investments of 7.9%. Sales and repayments of investments for the six months ended March 31, 2014 totaled $91.2 million.
For the three months ended March 31, 2013, we invested $45.1 million in 16 new and four existing portfolio companies with a weighted average yield on debt investments of 7.9%. Sales and repayments of investments for the three months ended March 31, 2013 totaled $43.9 million. For the six months ended March 31, 2013, we invested $84.0 million in 28 new and six existing portfolio companies with a weighted average yield on debt investments of 8.8%. Sales and repayments of investments for the six months ended March 31, 2013 totaled $74.2 million.
RESULTS OF OPERATIONS
Set forth below are the results of operations for the three and six months ended March 31, 2014 and 2013.
Investment Income
Investment income for the three and six months ended March 31, 2014 was $7.6 million and $14.5 million, respectively, and was attributable to $6.3 million and $11.8 million from senior secured loan investments, and $1.3 million and $2.7 million from second lien secured debt and subordinated debt investments. This compares to investment income for the three and six months ended March 31, 2013, which was $4.1 million and $8.1 million, respectively, and was attributable to $3.6 million and $6.9 million from senior secured loan investments, and $0.5 million and $1.2 million from second lien secured debt and subordinated debt investments. The increase in investment income over the prior year was primarily due to the growth of our portfolio.
Expenses
Expenses for the three and six months ended March 31, 2014 totaled $3.9 million and $7.5 million, respectively. Base management fee for the same periods totaled $1.0 million and $1.8 million, incentive fees totaled $1.4 million (including $0.3 million on net realized gains accrued, and $0.4 million on net unrealized gains accrued but not payable) and $2.1 million (including $0.7 million on net realized gains accrued, and $0.6 million on net unrealized gains accrued but not payable), our senior secured revolving credit facility, or the Credit Facility, expenses totaled $1.0 million and $2.4 million (including $0.7 million of Credit Facility amendment expenses), general and administrative expenses totaled $0.4 million and $1.0 million and excise taxes were $0.1 million and $0.2 million, respectively. This compares to expenses for the three and six months ended March 31, 2013, which totaled $2.5 million and $4.4 million, respectively. Base management fee for the same periods totaled $0.5 million and $0.9 million, incentive fees totaled $0.6 million and $1.0 million (including $0.3 million on net unrealized gains accrued but not payable), Credit Facility expenses totaled $0.5 million and $1.0 million (excluding $0.5 million of Credit Facility amendment expenses), general and administrative expenses totaled $0.4 million and $0.9 million and excise taxes were $0.1 million, respectively. The increase in base management fee, incentive fee and Credit Facility expenses was due to the growth of our portfolio and expanding our borrowing capacity under our Credit Facility.
Net Investment Income
Net investment income totaled $3.7 million and $7.0 million, or $0.25 and $0.47 per share, for the three and six months ended March 31, 2014, respectively. Net investment income totaled $1.7 million and $3.7 million, or $0.24 and $0.54 per share, for the three and six months ended March 31, 2013, respectively. The increase in net investment income was due to a larger portfolio, which was partially offset by amendment costs. For the three months ended March 31, 2014, net investment income per share increased due to changes in yield environment over the prior year, whereas, for the six months ended March 31, 2014, net investment income per share decreased over the prior year as a result of both changes in yield environment and share issuances of common stock during 2013.
Net Realized Gains or Losses
Sales and repayments of investments for the three and six months ended March 31, 2014 totaled $35.7 million and $91.2 million and net realized gains totaled $0.5 million and $1.1 million, respectively. Sales and repayments of investments totaled $43.9 million and $74.2 million and realized gains totaled $1.1 million and $1.5 million for the three and six months ended March 31, 2013, respectively. The decrease in realized gains was driven by changes in market conditions for our investments.
Unrealized Appreciation or Depreciation on Investments and Credit Facility
For the three and six months ended March 31, 2014, we reported net unrealized appreciation on investments of $3.0 million and $5.3 million, respectively. For the three and six months ended March 31, 2013, we reported net unrealized appreciation on investments of $0.4 million and $0.1 million, respectively. As of March 31, 2014 and September 30, 2013, net unrealized appreciation (depreciation) on investments totaled $3.8 million and $(1.5) million, respectively. The change compared to last year was the result of changes in market values.
For each of the three and six months ended March 31, 2014, our Credit Facility had an unrealized appreciation of zero. For the three and six months ended March 31, 2013, our Credit Facility had an unrealized appreciation of zero and $0.4 million, respectively. As of March 31, 2014 and September 30, 2013, net unrealized appreciation on our Credit Facility totaled zero. The change compared to last year was due to changes in the capital markets.
Net Increase in Net Assets Resulting from Operations
Net increase in net assets resulting from operations totaled $7.2 million and $13.3 million, or $0.49 and $0.89 per share, respectively, for the three and six months ended March 31, 2014. This compares to a net increase in net assets resulting from operations which totaled $3.2 million and $5.0 million, or $0.45 and $0.72 per share, respectively, for the three and six months ended March 31, 2013. We continue to find attractive investment opportunities to grow net assets from operations.
LIQUIDITY AND CAPITAL RESOURCES
Our liquidity and capital resources are derived from public offerings, our Credit Facility, cash flows from operations, including investment sales and repayments, and income earned. Our primary use of funds from operations includes investments in portfolio companies and payments of fees and other operating expenses we incur. We have used, and expect to continue to use, our Credit Facility, the rotation of our portfolio and proceeds from public and private offerings of securities to finance our investment objectives.
As of March 31, 2014 and September 30, 2013, PennantPark Floating Rate Funding I, LLC's, or Funding I, had $173.2 million and $99.6 million of outstanding borrowings under the Credit Facility, respectively, and carried an interest rate of 2.16% and 2.18%, respectively, excluding the 0.375% undrawn commitment fee.
The annualized weighted average cost of debt for the six months ended March 31, 2014 and 2013, inclusive of the fee on the undrawn commitment on the Credit Facility but excluding amendment costs, was 2.39% and 2.63%, respectively.
Our operating activities used cash of $65.1 million for the six months ended March 31, 2014, and our financing activities provided cash of $65.6 million for the same period. Our operating activities used cash primarily for our investment activities and our financing activities provided cash primarily from net draws under the Credit Facility.
Our operating activities provided cash of $4.0 million for the six months ended March 31, 2013, and our financing activities used cash of $5.1 million for the same period. Our operating activities provided cash primarily from our investment activity that offset our financing activities, which used cash primarily to pay the deferred sales load and net repayments under the Credit Facility that was partially financed by the proceeds of our offering.
DISTRIBUTIONS
During the three and six months ended March 31, 2014, we declared to stockholders distributions of $0.270 and $0.538 per share, respectively, for total distributions of $4.0 million and $8.0 million, respectively. For the same periods in the prior year, we declared distributions of $0.255 and $0.503 per share, respectively, for total distributions of $1.7 million and $3.4 million, respectively. We monitor available net investment income to determine if a tax return of capital 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, a portion of those distributions may be deemed to be a tax return of capital to our common stockholders. Tax characteristics of distributions will be reported to stockholders on Form 1099-DIV after the end of the calendar year and in our periodic reports filed with the Securities and Exchange Commission, or the SEC.
AVAILABLE INFORMATION
The Company makes available on its website its report on Form 10-Q filed with the SEC and stockholders may find the report on its website at www.pennantpark.com.
PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
March 31, 2014 September 30, 2013
(unaudited)
---------------- ------------------
Assets
Investments at fair value
Non-controlled, non-affiliated
investments (cost-$385,423,226
and $319,283,468, respectively) $ 389,208,433 $ 317,803,894
Cash equivalents 5,080,140 4,578,249
Interest receivable 1,833,038 2,140,802
Receivable for investments sold 6,034,574 3,659,185
Prepaid expenses and other assets 534,298 619,737
---------------- ------------------
Total assets 402,690,483 328,801,867
---------------- ------------------
Liabilities
Distributions payable 1,340,825 1,303,580
Payable for investments purchased 6,887,632 14,021,588
Unfunded investments 2,000,000 934,555
Credit Facility payable (cost-
$173,200,000 and $99,600,000,
respectively) 173,200,000 99,600,000
Interest payable on Credit Facility 324,403 189,934
Management fee payable 952,949 731,635
Performance-based incentive fee
payable 2,241,511 1,164,090
Accrued other expenses 390,396 790,091
---------------- ------------------
Total liabilities 187,337,716 118,735,473
---------------- ------------------
Commitments and contingencies
Net assets
Common stock, 14,898,056 shares
issued and outstanding.
Par value $0.001 per share and
100,000,000 shares authorized. 14,898 14,898
Paid-in capital in excess of par
value 207,481,368 207,481,368
(Distributions in excess of)
Undistributed net investment income (580,496) 474,766
Accumulated net realized gain on
investments 4,651,790 3,574,936
Net unrealized appreciation
(depreciation) on investments 3,785,207 (1,479,574)
---------------- ------------------
Total net assets $ 215,352,767 $ 210,066,394
---------------- ------------------
Total liabilities and net assets $ 402,690,483 $ 328,801,867
---------------- ------------------
Net asset value per share $ 14.46 $ 14.10
================ ==================
PENNANTPARK FLOATING RATE CAPITAL LTD. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March 31, Six Months Ended March 31,
2014 2013 2014 2013
-------------- ------------- ------------ -------------
Investment income
from:
Non-controlled,
non-affiliated
investments:
Interest $ 7,529,198 $ 3,976,016 $ 14,283,445 $ 7,614,243
Other income 94,278 163,861 183,924 488,307
-------------- ------------- ------------ -------------
Total investment
income 7,623,476 4,139,877 14,467,369 8,102,550
-------------- ------------- ------------ -------------
Expenses:
Base management
fee 952,949 456,637 1,834,752 915,623
Performance-based
incentive fee 1,417,315 563,191 2,100,465 980,220
Interest and
expenses on the
Credit Facility 963,688 495,395 1,700,125 966,463
Administrative
services
expenses 201,000 153,679 402,000 308,824
Other general and
administrative
expenses 234,014 271,709 524,654 639,209
-------------- ------------- ------------ -------------
Expenses before
excise tax and
amendment costs 3,768,966 1,940,611 6,561,996 3,810,339
Excise tax 130,000 33,341 240,000 67,413
Credit Facility
amendment costs - 500,000 712,930 500,000
-------------- ------------- ------------ -------------
Total expenses 3,898,966 2,473,952 7,514,926 4,377,752
-------------- ------------- ------------ -------------
Net investment
income 3,724,510 1,665,925 6,952,443 3,724,798
-------------- ------------- ------------ -------------
Realized and
unrealized gain on
investments and
Credit Facility:
Net realized gain
on non-controlled,
non-affiliated
investments 482,797 1,104,627 1,076,854 1,547,470
Net change in
unrealized
appreciation on:
Non-controlled,
non-affiliated
investments 3,029,990 435,183 5,264,781 76,398
Credit Facility
appreciation - - - (377,500)
-------------- ------------- ------------ -------------
Net change in
unrealized
appreciation on
investments and
Credit Facility 3,029,990 435,183 5,264,781 (301,102)
-------------- ------------- ------------ -------------
Net realized and
unrealized gain
from investments
and Credit
Facility 3,512,787 1,539,810 6,341,635 1,246,368
-------------- ------------- ------------ -------------
Net increase in net
assets resulting
from operations $ 7,237,297 $ 3,205,735 $ 13,294,078 $ 4,971,166
============== ============= ============ =============
Basic - Net
increase in net
assets resulting
from operations
per common share $ 0.49 $ 0.45 $ 0.89 $ 0.72
-------------- ------------- ------------ -------------
Basic - Net
investment income
per common share $ 0.25 $ 0.24 $ 0.47 $ 0.54
-------------- ------------- ------------ -------------
Diluted - Net
increase in net
assets resulting
from operations
per common share $ 0.49 $ 0.45 $ 0.89 $ 0.71
-------------- ------------- ------------ -------------
Diluted - Net
investment income
per common share $ 0.25 $ 0.24 $ 0.47 $ 0.53
-------------- ------------- ------------ -------------
ABOUT PENNANTPARK FLOATING RATE CAPITAL LTD.
PennantPark Floating Rate Capital Ltd. is a business development company which primarily invests in U.S. middle-market private companies in the form of floating rate senior secured loans. From time to time, the Company may also invest in mezzanine debt and equity investments. PennantPark Floating Rate Capital Ltd. is managed by PennantPark Investment Advisers, LLC.
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, or 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 we file 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. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.
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. 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 do not undertake to update our forward-looking statements unless required by law.
CONTACT: Aviv Efrat PennantPark Floating Rate Capital Ltd. Reception: (212) 905-1000 www.pennantpark.com