PennantPark Investment Corporation (NASDAQ:PNNT) Q3 2018 Earnings Conference Call Transcript

Aug 09, 2018 • 10:00 am ET

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PennantPark Investment Corporation (NASDAQ:PNNT) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning, and welcome to the PennantPark Investment Corporation's Third Fiscal Quarter 2018 Earnings Conference Call. Today's conference is being recorded. (Operator Instructions)

It is now my pleasure to turn the call over to Mr. Art Penn, Chairman and CEO of PennantPark Investment Corporation. Mr. Penn, you may begin your conference.

Executive
Arthur Penn

Thank you and good morning, everyone. I'd like to welcome you to PennantPark Investment Corporation's Third Fiscal Quarter 2018 Earnings Conference Call. I'm joined today by Aviv Efrat, our CFO. Aviv, please start off by disclosing some general conference call information and include a discussion about forward-looking statements.

Executive
Aviv Efrat

Thank you, Art. I'd like to remind everyone that today's call is being recorded. Please note that this call is the property of PennantPark Investment Corporation and that any unauthorized broadcast of this call in any form is strictly prohibited. Audio replay of the call will be available by using telephone numbers and PIN provided in our earnings press release as well as on our website.

(Forward-Looking Cautionary Statements) At this time, I'd like to turn the call back to our Chairman and CEO, Art Penn.

Executive
Arthur Penn

Thanks, Aviv. I'm going to provide an update on the business starting with financial highlights, followed by a discussion of the overall market, the portfolio, investment activity, the financials, and then open it up for Q&A.

For the quarter ended June 30, 2018, we invested $188 million in primarily first and second lien secured debt at an average yield of 10.5%. Net investment income was $0.17 per share. Our recurring run rate income is now $0.18 per share, excluding other income which we received for items such as pre-payment penalties.

We purchased $7.8 million of our common stock at an average price of $7.25 per share as part of a $30 million stock repurchase program which was authorized by our board last quarter. The stock buyback program is accretive to both NAV and income per share. We are looking forward to continuing this program over the coming quarters.

As of September 30, we had taxable spillover of $0.26 per share, which provides further dividend cushion. With a generally stable underlying portfolio and substantial spillover, we believe that PNNT stock should be able to provide investors with an attractive dividend stream, along with potential upside, as our equity investments mature.

Our primary business of financing middle market sponsors has remained robust. We manage relationships with about 400 private equity sponsors across the country from our offices in New York, Los Angeles, Chicago, Houston and London. We have done business with about 180 sponsors. Due to the wide funnel of deal flow that we receive relative to the size of our vehicles, we can be extremely selective with our investments. In this environments, we have not only been extremely selective, but we have generally moved up capital structure to more secure investments.

Reminder about our long-term track record. PNNT was in business in 2007, then, as now, focused on financing middle market financial sponsors. Our performance through the