Prospect Capital (PSEC) Q2 2025 earnings summary

Executive summary

• Net investment income for the December quarter was $86.4 million ($0.20 per share), with NAV at $3.4 billion, or $7.84 per share, reflecting a decline from prior periods due to realized/unrealized losses and distributions exceeding income.

• Total investments at fair value were $7.13 billion across 114 portfolio investments and CLOs, with a focus on first and second lien secured loans and equity in private companies.

• Portfolio yield on performing interest-bearing investments was 9.40% for the quarter, with annualized yield on all investments at 9.1% and performing investments at 11.2%.

• Over $4.4 billion distributed since inception, equating to 2.7 times December 2024 NAV per share.

• The company remains externally managed, focusing on middle-market lending, control equity, real estate, and structured credit.

Financial highlights

• Net debt to total assets was 28.1% at December 31, with net of cash debt to equity ratio at 39.8%.

• Unsecured debt plus preferreds comprised 91.9% of total debt plus preferred.

• Interest income represented 91% of total investment income in the December quarter.

• Payment-in-kind income was $20 million, down 39% from the prior quarter and nearly 50% from June 2024.

• Non-accruals as a percentage of total assets stood at 0.4%, up from 0.2% a year ago.

Outlook and guidance

• Management expects continued volatility in financial markets due to macroeconomic factors, including interest rate changes, inflation, and geopolitical risks.

• Plans to continue rotating assets into first-lien, senior-secured middle-market loans and to announce the next set of shareholder distributions in May.

• Ongoing focus on capital preservation and redeployment of asset sale proceeds into value-added property expenditures and first-lien loans.

• No material subsequent events outside the ordinary course of business were identified through the report date.