Prospect Capital Corporation (NASDAQ:PSEC) Q2 2019 Earnings Conference Call Transcript

Feb 07, 2019 • 11:00 am ET

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Prospect Capital Corporation (NASDAQ:PSEC) Q2 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning and welcome to the Prospect Capital Corporation Second Fiscal Quarter Earnings Release and Conference Call. All participants will be in listen-only mode. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Mr. John Barry, Chairman and CEO, Please go ahead.

Executive
John Barry

Thank you, Phil. Joining me on the call today are once again Grier Eliasek, our President and Chief Operating Officer and Kristin Van Dask, our Chief Financial Officer. Kristin?

Executive
Kristin Van Dask

Thanks, John. This call is the property of Prospect Capital Corporation. Unauthorized use is prohibited. This call contains forward-looking statements within the meaning of the securities laws that are intended to be subject to Safe Harbor protection. Actual outcomes and results could differ materially from those forecasts due to the impact of many factors. We do not undertake to update our forward-looking statements unless required by law. For additional disclosure, see our earnings press release, our 10-Q and our corporate presentation filed previously and available on the Investor Relations tab on our website, prospectstreet.com.

Now, I'll turn the call back over to John.

Executive
John Barry

Thanks, Kristin. For the December 2018 quarter, our net investment income or NII was $80.8 million, $0.22 per share, down $0.01 from the prior quarter and exceeding our current dividend rate of $0.18 by $0.04. NII decreased due to higher operating expenses, partially offset by higher structuring fee income. In the December 2018 quarter, our net debt to equity ratio was 75%, down 0.1% from the prior quarter.

Taking into account changes in balance sheet values as of the market close on December 31, 2018, our net loss for the quarter was $67.4 million or $0.18 per share, a decrease of $0.41 from the prior quarter. This change was driven primarily by unrealized losses in the portfolio, including a decline in industry valuations in the debt and equity capital markets as of the market close December 31, 2018. We are announcing monthly cash distributions to shareholders of $0.06 per share for each of February, March and April, representing 129 consecutive shareholder distributions.

We plan on announcing our next series of shareholder distributions in May. Since our IPO nearly 15 years ago through our April 2019 distribution at our current share count, we will have paid out $17.16 per share to original shareholders, aggregating approximately $2.8 billion in cumulative distributions to all shareholders. Our NAV stood at $9.02 per share in December 2018, down $0.37 from the prior quarter.

Thank you. I'll now turn the call over to Grier.

Executive
Grier Eliasek

Thank you, John. Our scale of business with over 6 billion of assets and undrawn credit continues to deliver solid performance. Our experienced team consists of approximately 100 professionals, representing one of the largest middle market credit groups in the industry. With our scale, longevity, experience and deep bench, we continue to focus on a diversified investment strategy that covers third-party private equity sponsor related and direct non-sponsor lending, Prospect sponsored operating and financial buyouts, structured credit, real estate