PROSPECT CAPITAL CORP Q3 FY2024 earnings call

• Net investment income (NII) in March quarter: $94.4 million, $0.23 per common share. NAV: $3.74 billion or $8.99 per common share, up $0.07 from prior quarter. Net debt-to-equity ratio: 46.2%. Monthly common shareholder distributions: $0.06 per share for May, June, July, August planned, next set to be announced in August.
• Portfolio composition: 59% first lien debt, 14.6% second lien debt, 7.3% subordinated structured notes, 19.1% unsecured debt and equity investments. Performing interest-bearing investments annualized yield: 12.1% as of March 2024, down 0.2 percentage points. Interest income in March quarter: 91% of total investment income. Held 122 portfolio companies, fair value $7.8 billion, increase of ~$175 million. Diversified across industries, no significant concentration. Nona-ccruals: 0.4% in March. Weighted average middle market portfolio net leverage: 5.5 times EBITDA. Weighted average EBITDA per portfolio company: $106 million. Originations and repayments in March quarter details.
• Private REIT (NPRC) performance: 46 properties exited with strong IRR and cash multiple. Structured credit business details: portfolio size, yields, distributions, and exits.
• Balance sheet strength: Prudent leverage, diversified access to matched book funding, substantial unencumbered assets, weighting toward unsecured fixed rate debt. Locked in ladder of liabilities extending 28 years. Total unfunded eligible commitments to portfolio companies: ~$25 million (0.3% of assets). Combined balance sheet cash and undrawn revolving credit facility commitments: $1.1 billion. Unencumbered assets: $4.9 billion (62% of portfolio). Revolver details: Revolves until September 2026, drawn pricing SOFR plus 2.05%, accordion limit increased to $2.25 billion. Issued investment-grade unsecured debt with no financial covenants, multiple investment-grade ratings. Debt maturities extend through 2052. Raised $1.8 billion in perpetual preferred stock, weighted average cost of unsecured debt financing: 4.14% as of March 31, 2024.

In the March quarter, net investment income (NII) was $94.4 million, $0.23 per common share. NAV was $3.74 billion or $8.99 per common share, up $0.07 from prior quarter. Net debt-to-equity ratio was 46.2%. Portfolio at fair value: 59% first lien debt (up 0.3% from prior quarter), 14.6% second lien debt (down 0.9% from prior quarter), 7.3% subordinated structured notes with underlying secured first lien collateral (down 0.6% from prior quarter), 19.1% unsecured debt and equity investments (up 1.2% from prior quarter). Performing interest-bearing investments had an annualized yield of 12.1% as of March 2024, down 0.2 percentage points from prior quarter. Interest income in March quarter was 91% of total investment income. Held 122 portfolio companies with fair value $7.8 billion, increase of approx. $175 million from prior quarter. Nona-ccruals as % of total assets was ~0.4% in March, up 0.2% from prior quarter. Weighted average middle market portfolio net leverage was 5.5 times EBITDA. Weighted average EBITDA per portfolio company was $106 million. Originations in March quarter aggregated $219 million, with $114 million of repayments, sales and exits, resulting in net originations over $105 million. Originations comprised 65.3% middle market lending, 29% real estate, 5.6% middle market lending and buyouts. Private REIT (NPRC) exited 46 properties with average net realized IRR of 25.2% and average realized cash multiple of 2.5 times. Structured credit business held $572 million across 33 non-recourse subordinated structured notes investments, generated GAAP yield of 3.3% and cash yield of 22.1% in March quarter, cumulative cash distributions of $1.5 billion, exited 15 investments with average realized IRR of 12% and cash on cash multiple of 1.3 times. In June quarter, originations were $29 million, repayments $55 million, net repayments ~$26 million, with 57% middle market lending and 43% real estate.

• Announced monthly common shareholder distributions of $0.06 per share for May, June, July, August.
• Plan to announce next set of shareholder distributions in August.