PennantPark Investment Corporation (NASDAQ:PNNT) Q1 2019 Earnings Conference Call Transcript

Feb 08, 2019 • 10:00 am ET

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PennantPark Investment Corporation (NASDAQ:PNNT) Q1 2019 Earnings Conference Call Transcript

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Presentation
Executive
Arthur Penn

managing general agent, primarily offering personal non-standard auto insurance products. We purchased $14.2 million of the second lien term loan. Abry is the sponsor.

We purchased $26.4 million in the first lien term loan of ProVation Medical. The company is a provider of clinical productivity software for healthcare professionals. Clearlake Capital is the sponsor.

Turning to the outlook; we believe that 2019 will be active due to growth in M&A driven financings, due to our strong sourcing network and client relationships, we're seeing active deal flow.

Let me now turn the call over to Aviv, our CFO, to take you through the financial results.

Executive
Aviv Efrat

Thank you, Art. For the quarter ended December 31 2018, net investment income totaled $0.18 per share. We had about $0.01 per share of other income.

Looking at some of the expense categories; management fees totaled $7.1 million. General and administrative expenses totaled $1.1 million; and interest expense totaled $6.3 million. During the quarter ended December 31, unrealized loss from investment was $20 million or $0.29 per share. Unrealized gain on debt instruments was $6 million or $0.09 per share. We had about $9 million or $0.12 per share of realized gains. The accretive effect of our share buyback was $0.02 per share.

Our net investment income rather, covered our dividend. Consequently, NAV per share went from $9.11 per share to $9.05 per share. As a reminder, our entire portfolio, credit facility and senior notes are mark-to-market by our Board of Directors, each quarter using the exit price provided by independent valuation firms, security and exchanges, or independent broker-dealer quotations when active markets are available under ASC 820 and 825. In cases where broker-dealer quotes are inactive, we use independent valuation firms to value the investments. Our overall debt portfolio has a weighted average yield of 10.9%.

On December 31, our portfolio consisted of 56 companies across 26 different industries. That portfolio was invested in 48% first lien senior secured debt, 34% in second lien secured debt, 4% in subordinated debt and 14% in preferred and common equity. 90% of the portfolio has a floating rate.

Now let me turn the call back to Art.

Executive
Arthur Penn

Thanks Aviv. To conclude, we want to reiterate our mission; our goal is to generate attractive risk-adjusted returns through income coupled with long-term preservation of capital. Everything we do is aligned to that goal. We try to find less risky middle market companies, that have high free cash flow conversion. We capture that free cash flow, primarily in debt instruments and we pay out those contractual cash flows in the form of dividends to our shareholders.

In closing, I'd like to thank our extremely talented team of professionals for their commitment and dedication. Thank you all for your time today and for your continued investment and confidence in us.

That concludes our remarks. At this time, I would like to open up the call to questions.