Prospect Capital Corporation celebrates its 20th anniversary as a leading provider of private debt and equity to U.S. middle-market companies
Long History and Large Scale: Prospect is one of the largest ($7.9B in total assets) and oldest publicly traded BDCs. Founded in 2004, Prospect's 20-year history began before and invested during and across the Great Financial Crisis, unlike the vast bulk of other BDCs with much shorter histories.
Downside Protection Focus: 81% of portfolio in first lien, secured, or underlying secured assets.
Multi-Line BDC: Multiple strategies, middle-market lending (52%), middle-market lending / buyout (19%), real estate (19%), and subordinated structured notes (7%).(1)
Track Record: Invested $20.9B across 423 investments (303 exited) during 20-year history.
Recurring Income: 89% of total investment income from interest income for the quarter ended 6/30/2024.
Successful Credit Facility Closing: On 6/28/2024, Prospect successfully completed an amended and extended credit facility with a new 5-year maturity. The credit facility has $2.1 billion of commitments from 48 commercial banks, an increase of $168 million from 3/31/2024.
Cash Distributions to Shareholders: Prospect will have distributed $21.12 per share since 2004 to original common shareholders, representing 2.4 times June 2024 common NAV per share and 4.1 times the stock price on 8/27/2024, and aggregating $4.3 billion in cumulative distributions to all common shareholders (since inception through our October 2024 declared distribution and taking into account past distributions and our current share count for declared distributions).
Higher Total Returns: Prospect has higher total returns (38.7%) compared to the publicly-traded BDC median (37.0%) based on the 5-year total change in NAV plus dividends.(2)
(1) Totals may not add to 100% given other smaller and non-core investment strategies.(2) Calculated as change in NAV per share plus dividends for the five years ended 3/31/2024. Information related to past performance, while potentially helpful as an evaluative tool, is not indicative of future results. PSEC analysis of S&P Capital IQ data for 42 listed BDC peers for which there is quarterly data for the five years ended 3/31/2024.
FINANCIAL RESULTS
All amounts in $000's except per share amounts (on weighted average basis for period numbers)
Quarter EndedJune 30, 2024
Quarter EndedMarch 31, 2024
Quarter EndedJune 30, 2023
Net Investment Income ("NII")
$102,922
$94,375
$112,779
NII per Common Share
$0.25
$0.23
$0.28
Interest as % of Total Investment Income
89.2%
91.0%
89.1%
Net Income (Loss) Applicable to Common Shareholders
$(9,050)
$113,891
$(13,950)
Net Income (Loss) per Common Share
$(0.02)
$0.27
$(0.03)
Distributions to Common Shareholders
$75,640
$74,685
$72,490
Distributions per Common Share
$0.18
$0.18
$0.18
Cumulative Paid and Declared Distributions to Common Shareholders(1)
$4,325,055
$4,248,235
$4,022,859
Cumulative Paid and Declared Distributions per Common Share(1)
$21.12
$21.00
$20.40
Multiple of Net Asset Value ("NAV") per Common Share
2.4x
2.3x
2.2x
Total Assets
$7,857,092
$7,905,794
$7,861,666
Total Liabilities
$2,559,171
$2,603,811
$2,710,987
Preferred Stock
$1,586,188
$1,559,764
$1,418,014
Net Asset Value ("NAV") to Common Shareholders
$3,711,733
$3,742,219
$3,732,665
NAV per Common Share
$8.74
$8.99
$9.24
Balance Sheet Cash + Undrawn Revolving Credit Facility Commitments
$1,357,577
$1,101,604
$993,443
Net of Cash Debt to Total Assets
30.5%
31.2%
32.4%
Net of Cash Debt to Equity Ratio(2)
44.7%
46.2%
48.8%
Net of Cash Asset Coverage of Debt Ratio(2)
323%
315%
304%
Unsecured Debt + Preferred Equity as % of Total Debt + Preferred Equity
80.3%
77.7%
74.8%
Unsecured and Non-Recourse Debt as % of Total Debt
100.0%
100.0%
100.0%
All amounts in $000's exceptper share amounts
Year EndedJune 30, 2024
Year EndedJune 30, 2023
NII
$419,836
$420,929
NII per Common Share
$1.02
$1.06
Net Income (Loss) Applicable to Common Shareholders
$147,416
$(172,473)
Net Income (Loss) per Common Share
$0.36
$(0.43)
Distributions to Common Shareholders
$297,633
$287,241
Distributions per Common Share
$0.72
$0.72
(1) Declared dividends are through the October 2024 distribution. August through October 2024 distributions are estimated based on shares outstanding as of 7/29/2024.(2) Including our preferred stock as equity.
CASH COMMON SHAREHOLDER DISTRIBUTION DECLARATION
Prospect is declaring distributions to common shareholders as follows:
Monthly Cash Common Shareholder Distribution
Record Date
Payment Date
Amount ($ per share)
September 2024
9/26/2024
10/22/2024
$0.0600
October 2024
10/29/2024
11/19/2024
$0.0600
These monthly cash distributions are the 85st and 86th consecutive $0.06 per share distributions to common shareholders.
Prospect expects to declare November 2024, December 2024 and January 2025 distributions to common shareholders in November 2024.
Based on the declarations above, Prospect's closing stock price of $5.09 at August 27, 2024 delivers to our common shareholders an annualized distribution yield of 14.1%.
Taking into account past distributions and our current share count for declared distributions, since inception through our October 2024 declared distribution, Prospect will have distributed $21.12 per share to original common shareholders, representing 2.4 times June 2024 common NAV per share and 4.1 times the stock price on 8/27/2024, aggregating $4.3 billion in cumulative distributions to all common shareholders.
Since inception in 2004, Prospect has invested $20.9 billion across 423 investments, exiting 302 of these investments.
Drivers focused on growing NII and NAV include (1) our $2.25 billion targeted 6.50% and Floating Rate perpetual preferred stock offerings, (2) greater utilization of our cost efficient revolving floating rate credit facility, (3) elevated short-term SOFR rates which boost asset yields, (4) optimization of portfolio company performance, and (5) increased primary and secondary originations of senior secured debt and selected equity investments targeting attractive risk-adjusted yields and total returns as we deploy dry powder from our underleveraged balance sheet.
Our senior management team and employees own 26% of all common shares outstanding or approximately $1.0 billion of our common equity as measured at NAV.
PORTFOLIO UPDATE AND INVESTMENT ACTIVITY
All amounts in $000's except per unit amounts
As of
As of
As of
June 30, 2024
March 31, 2024
June 30, 2023
Total Investments (at fair value)
$7,718,243
$7,806,712
$7,724,931
Number of Portfolio Companies
117
122
130
First Lien Debt
60.3%
59.0%
56.5%
Second Lien Debt
13.6%
14.6%
16.4%
Subordinated Structured Notes
6.9%
7.3%
8.6%
Unsecured Debt
0.1%
0.1%
0.1%
Equity Investments
19.1%
19.0%
18.4%
Mix of Investments with Underlying Collateral Security
80.8%
80.9%
81.5%
Annualized Current Yield, All Investments
9.8%
9.7%
10.7%
Annualized Current Yield, Performing Interest Bearing Investments
12.1%
12.1%
13.3%
Top Industry Concentration(1)
19.1%
18.4%
18.6%
Retail Industry Concentration(1)
0.3%
0.3%
0.3%
Energy Industry Concentration(1)
1.6%
1.4%
1.6%
Hotels, Restaurants & Leisure Concentration(1)
0.3%
0.3%
0.3%
Non-Accrual Loans as % of Total Assets (2)
0.3%
0.4%
1.1%
Middle-Market Loan Portfolio Company Weighted Average EBITDA(3)
$107,328
$106,394
$113,071
Middle-Market Loan Portfolio Company Weighted Average Net Leverage Ratio(3)
5.5x
5.5x
5.2x
For the quarter ended September 30, 2024 to date, Total Repayments and Sales (see below) include $198M for Second Lien Debt, which represented a further 2.3% decline (based on the total investment portfolio as of June 30, 2024) from the 13.6% in the table above. Since June 30, 2023 and including ...
