Earnings call transcript: PennantPark Floating Rate Capital misses Q3 2025 EPS forecast

PennantPark Floating Rate Capital Ltd (PFLT) reported its third-quarter 2025 earnings, missing analyst expectations with an EPS of $0.27, compared to the forecasted $0.29. Revenue also fell short, coming in at $63.5 million against a projected $66.04 million. Following the announcement, PFLT’s stock declined by 2.26% in after-hours trading, closing at $10.42. Despite the earnings miss, InvestingPro data shows the company maintains an impressive 11.75% dividend yield and has consistently paid dividends for 15 consecutive years.

Key Takeaways

• PFLT’s EPS and revenue both missed analyst expectations for Q3 2025.
• The company’s stock fell by 2.26% in after-hours trading.
• A new joint venture with Hamilton Lane was announced, targeting a $500 million portfolio.

Company Performance

PennantPark Floating Rate Capital’s performance this quarter was marked by a slight decline in net asset value (NAV) and a reported loss of $5.3 million from net realized and unrealized changes on investments. Despite these setbacks, the company increased its portfolio value to $2.4 billion, up from $2.3 billion in the previous quarter. The firm continues to support its existing portfolio companies while exploring new investment opportunities.

Financial Highlights

• Revenue: $63.5 million, below the forecast of $66.04 million.
• Earnings per share: $0.27, missing the forecast of $0.29.
• Net Asset Value (NAV): $10.96 per share, down 1% from the previous quarter.
• Portfolio value: $2.4 billion, up from $2.3 billion in the prior quarter.

Earnings vs. Forecast

PennantPark’s actual EPS of $0.27 fell short of the expected $0.29, reflecting a negative surprise of 6.9%. Revenue also missed expectations by 3.85%, a notable deviation that has not been characteristic of the company’s recent quarters, where it often met or exceeded forecasts.

Market Reaction

Following the earnings announcement, PFLT’s stock price dropped by 2.26% to $10.42 in after-hours trading. This decline reflects investor disappointment in the earnings miss, with the stock now trading closer to its 52-week low of $8.82 rather than its high of $11.9.

Outlook & Guidance

Looking forward, PennantPark anticipates increased loan originations in the second half of 2025. The company plans to leverage its joint ventures, including the newly announced partnership with Hamilton Lane, to drive growth. The Hamilton Lane joint venture is expected to begin investing in September or October, with a 12-18 month ramp-up period. With a market capitalization of $1.02 billion and a beta of 0.96, InvestingPro analysis indicates the stock generally trades with low price volatility, making it an interesting option for income-focused investors.

Executive Commentary

CEO Art Penn emphasized the company’s commitment to maintaining a stable dividend stream and preserving capital. He noted an uptick in deal activity, which is expected to enhance loan originations in the coming months. Penn highlighted the company’s cautious approach, prioritizing credit quality over spread expansion.

Risks and Challenges

• Market volatility may continue to impact stock performance and investor sentiment.
• The company’s reliance on floating rate debt could pose risks if interest rates fluctuate unfavorably.
• Potential delays in the ramp-up of the Hamilton Lane joint venture could affect projected growth.

Q&A

During the earnings call, analysts inquired about the company’s strategy for new deal activity and its focus on sponsor-backed deals. Management reiterated its cautious approach, emphasizing credit quality and potential improvements in loan pricing with increased market activity.

Full transcript - PennantPark Floating Rate Capital (PFLT) Q3 2025:

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: Thank you, and good morning, everyone. Welcome to PennantPark Floating Rate Capital’s third fiscal quarter twenty twenty five earnings conference call. I’m joined today by Rick Alordo, our Chief Financial Officer. Rick, please start off by disclosing some general conference call information and include a discussion about forward looking statements.

Rick Alordo, Chief Financial Officer, PennantPark Floating Rate Capital: Thank you, Art. I’d like to remind everyone that today’s call is being recorded. Please note that this call is the property of PennantPark Floating Rate Capital and that any unauthorized broadcast of this call in any form is strictly prohibited. An audio replay of the call will be available on our website. I’d also like to call your attention to the customary safe harbor disclosure in our press release regarding forward looking information.

Today’s conference call may also include forward looking statements and projections, and we ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from these projections. We do not undertake to update our forward looking statements unless required by law. To obtain copies of our latest SEC filings, please visit our website at pennantpark.com or call us at (212) 905-1000. At this time, I’d like to turn the call back to our Chairman and Chief Executive Officer, Art Penn.

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: Thanks, Rick. I’m going to spend a few minutes discussing how we fared in the quarter ended June 30, highlight the financing activities executed during the quarter to strengthen the balance sheets of both PFLT and the PSSL joint venture. Then I’ll comment on our new joint venture, the current market environment for private middle market lending, and how the portfolio is positioned for upcoming quarters. Rick will conclude with a detailed review of the financials, and then we’ll open up the call for Q and A. We are seeing an encouraging recent uptick in deal activity, which we believe will lead to increased loan originations in the second half of twenty twenty five.

Additionally, we continue to provide additional capital to many of our existing portfolio companies as they execute their respective growth plans. Our platform continues to prove its strength as we support our existing portfolio companies and private equity borrowers with strategic capital solutions to help grow their businesses. With regard to how we fared in the quarter ended June 30, core net investment income for the quarter was $0.27 per share. We believe we will achieve net investment income coverage of the dividend as we scale into our target leverage range and as the new joint venture becomes operational. A reminder, prior to Liberation Day, we proactively built a war chest through our ATM program and debt financing activities based on the expectation of sustained deal flow throughout the year.

While market activity slowed following Liberation Day, we have seen a notable rebound in recent weeks. Looking ahead, we are encouraged by the strong outlook for the remainder of the year and anticipate continued NII growth and full dividend coverage. We are pleased to announce the formation of a new joint venture with our long term and trusted partner, Hamilton Lane. The company and Hamilton Lane have committed to provide $200,000,000 of capital to the joint venture and combined with an expected $300,000,000 financing facility, the total portfolio will be $500,000,000 Similar to PSSL, the new joint venture will invest in our core middle market directly originated senior secured loans. We anticipate beginning to invest the capital towards the September or the October.

Continue to believe that the current vintage of core middle market directly originated loans is excellent. In the core middle market, leverage is lower and spreads are higher than in the upper middle market. In the core middle market, the pricing on high quality first lien term loans is over plus $4.75 to $5.25, and we continue to get meaningful covenant protections while the upper middle market is primarily characterized as covenant light. Turning to our current portfolio, we continue to maintain what we believe is one of the most conservatively structured portfolios in the direct lending industry. As of June 30, our portfolio’s weighted average leverage ratio to our debt security was 4.3 times, and the portfolio’s weighted average interest coverage ratio was 2.5 times.

For new platform investments made during the quarter, the weighted average debt to EBITDA was 3.8 times, and the weighted average interest coverage was 2.6 times. Weighted average loan to value was 46%, and the yield to maturity was 10.3%. As of June 30, we had two investments on nonaccrual status, and total nonaccruals represented only 1% of the portfolio at cost and 0.5% at market value. These are strong credit metrics, which reflect the rigor of our underwriting process and the discipline of our investment approach. We continue to believe that our focus on core middle market loans provides us with attractive investment opportunities where we provide important strategic capital to our borrowers.

We have a demonstrated track record of value creation through the successful financing of growing middle market companies across five key sectors. These are sectors in which we possess deep domain expertise, enabling us to ask the right questions and consistently deliver strong investment outcomes. They are business services, consumer, government services and defense, health care, and software and technology. These sectors have been recession resilient, tend to generate strong free cash flow, and have a limited direct impact to the recent tariff increases and uncertainty. Core middle market companies, typically those with 10 to 50,000,000 of EBITDA, operate below the threshold of broadly syndicated loan or high yield markets.

The core middle market, because we are an important strategic lending partner, the process and package of terms we receive is attractive. We have many weeks to do our diligence with care. We thoughtfully structure transactions with sensible credit statistics, meaningful covenants, substantial equity cushions to protect our capital, attractive spreads, and equity co investment. Additionally, from a monitoring perspective, we receive monthly financial statements to help us stay on top of the companies. Regarding covenant protections, while the upper middle market has seen significant erosion, our originated first lien loans consistently include meaningful covenants that safeguard our capital.

Credit quality since inception over 14 ago has been excellent. CFLT has invested $7,800,000,000 in over 500 companies, and we’ve experienced only 23 nonaccruals. Since inception, PFLT’s loss ratio on invested capital is only 11 basis points annually. As a provider of strategic capital, we fuels the growth of our portfolio companies. In many cases, we participate in the upside of the company by making an equity co investment.

Our returns on these equity co investments have been excellent over time. Overall for our platform from inception through June 30, We invested over $583,000,000 in equity co investments and have generated an IRR of 26% and a multiple on invested capital of two times. As of June 30, our portfolio grew to $2,400,000,000 up from $2,300,000,000 in the prior quarter. During the quarter, we continued to originate attractive investment opportunities and invested $2.00 $8,000,000 in four new and 17 existing portfolio companies at a weighted average yield of 10.1%. During the quarter, we undertook several key initiatives to fortify our balance sheet, enhance liquidity, and position the company to capitalize on emerging market opportunities.

In April, we amended the Truist revolving credit facility and reduced the interest rate on the facility to to SOFR plus 200 from SOFR plus two twenty five. The amendment also extended the revolving period and final maturity by one year to August 2028 and August 2030, respectively. Our financial strength was also enhanced by attractive equity capital raised from our ATM program. During the quarter, we raised $32,000,000 from the issuance of 2,800,000.0 shares of our common stock at an average price of $11.31 per share. Our PSSL joint venture has also taken significant strides in bolstering its financial strength as well.

As of June 30, the JV portfolio totaled $1,100,000,000 And during the quarter, it invested $52,000,000 in seven new and two existing portfolio companies at a weighted average yield of 10.8%. April, PSSL closed on a new securitization financing at an attractive weighted average price of SOFR plus $1.71. PSSL has $250,000,000 of additional committed debt and equity capital and can grow its total portfolio to $1,400,000,000. We believe that the increase in scale of the JV’s balance sheet will continue to drive attractive mid teens returns on invested capital and enhance PFLT’s earnings momentum. From an outlook perspective, our experienced and talented team and our wide origination funnel is well set up to produce active deal flow.

Our continued focus remains on capital preservation and being patient investors. Our mission and goal are a steady, stable, and protected dividend stream coupled with the preservation of capital. Everything we do is aligned to that goal. Seek to find investment opportunities in growing middle market companies that that have high free cash flow conversion. We capture that free cash flow primarily in first lien senior secured instruments, and we pay out those contractual cash flows in form of dividends to our shareholders.

Let me now turn the call over to Rick, our CFO, to take us through the financial results in more detail.

Rick Alordo, Chief Financial Officer, PennantPark Floating Rate Capital: Thank you, Art. For the quarter ended June 30, GAAP net investment income was $0.25 per share, while core net investment income was $0.27 per share. Operating expenses for the quarter were as follows. Interest and expenses on debt were $25,400,000 Base management and performance based incentive fees were $11,300,000 General and administrative expenses were $1,950,000 and provision for taxes was 200,000 For the quarter ended June 30, net realized and unrealized change on investments, including provision for taxes, was a loss of $5,300,000 As of June 30, NAV was $10.96 per share, which is down 1% from 11.07 per share last quarter. As of June 30, our debt to equity ratio was 1.3 times, and our capital structure is diversified across multiple funding sources, including both secured and unsecured debt.

As of June 30, our key portfolio statistics were as follows. The portfolio remains well diversified, comprising a 155 companies across 50 industries. The weighted average yield on our debt investments was 10.4%, and approximately 99% of the debt portfolio is floating rate. Fixed income equals only 1.8% of total interest income. We have two nonaccruals, which represent 1% of the portfolio at cost and point 5% at market value.

The portfolio is comprised of ninety percent first lien senior secured debt, less than 1% in subordinated debt, 2% in equity of PSSL, and 8% in equity co investments. The debt to EBITDA on portfolio is 4.3 times, and interest coverage was 2.5 times. Now let me turn the call back to Art.

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: Thanks, Rick. In conclusion, I want to express my gratitude to our dedicated team of professionals for their unwavering commitment to PFLT and its shareholders. Thank you all for your time today and for your investment and confidence in us. That concludes our remarks. At this time, I would like to open up the call for questions.

Conference Operator: Thank

Brian McKenna, Analyst, Citizens: you.

Conference Operator: Type your question in the Ask a Question box and click Send. We will take your first question from Brian McKenna with Citizens.

Brian McKenna, Analyst, Citizens: Thanks. Good morning, everyone. Congratulations on the new JV with Hamilton Lane. Just a few questions here. If this pickup and acceleration in deal activity continues, how much of the $500,000,000 could you deploy over the next few quarters?

How are you thinking about, the potential accretion from the JV within the P and L at PFLT? And then obviously, Hamilton Lane is getting access to high quality core middle market deal flow and transactions. But is there anything you can leverage from the Hamilton Lane platform to drive better outcomes for the JV as well?

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: A bunch of great questions in there, Brian. Let’s make sure I hit them all. In terms of, being able to ramp it, I think we think of it as kind of a 12 ramp for the $500,000,000 maybe eighteen months on the outside. But in light of our platform, we think of it as a twelve month to eighteen month ramp. And as you’ve seen, the two other JVs we’ve had in our platform, both the PFLT and P and NT, these things can, if we have done well, we hope it will be well in a good simpatico with Hamilton Lane, they can grow very substantially above and beyond that.

So our goal would be this is a long term partnership with this JV and then it grows from $500,000,000 to something larger over time. We have been able to get kind of NII dividend yields on these JVs in the mid to upper teens between the PSSL1 here and PFLT as well as PSLF over PNNT kind of mid to upper teens returns on an NII basis on the capital invested. So you can model the $150,000,000 we are putting in put a mid to upper teens NII return on that and see what that means. But over time, we hope it’s a really long term great long term partnership. We have had a lot of exposure to Hamilton Lane to date and that’s kind of what led the way to this and we think there is a real sympatico around credit and how we look at things.

And then, yes, we expect all these JVs, the other JVs we have as well to be real partnerships where both parties contribute ideas and diligence and thoughts with what’s going on in the economy. Hamilton Lane has a lot of great relationships with private equity sponsors and other people that we could be doing business with. So we expect and hope that they will help us in that regard. So we’re very excited about it.

Brian McKenna, Analyst, Citizens: Okay. That’s really helpful. Thanks, Art. And then maybe just a little bit of a bigger picture question. You and the team have clearly done a great job growing your public BDCs in aggregate.

The market caps for both PFLT and PNNT totaled about $1,500,000,000 I’m curious, so what’s your longer term growth plans for both of these vehicles? And I think I asked you this almost every quarter, but at what point or size does it make sense to merge them? And then assuming you ultimately have one one public BDC longer term, I mean, would you ever think about internalizing the corporate structure?

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: So, you know, in terms of the first question, growth, we, you know, we are not the type of firm to sit here and put the kind of growth parameters out there and then kind of have goals because we think that’s antithetical to credit quality and investment selection. So in a business where you have quality on one scale and quality on the other, clearly, we focus on quality. So the growth will be organic based on the opportunity in the market and where it makes sense to invest. So the growth will be the growth as you have seen over all these years and it will be based on kind of the market opportunity. You do ask the same question every quarter, Brian, about potentially merging.

And the answer every quarter, and you can record this and play back to yourself going forward, is all things are always on the table. That said, PNNT, we still got to work through some equity rotation issues at PNNT. So our main focus there is to do that. And then once we do that, we can come up for air and assess all the different options that are available in the world. We, of course, put shareholder value is number one, what’s best for shareholders.

And that’s always our north star when we look at these things.

Brian McKenna, Analyst, Citizens: We’ll hear next from Aaron Cyganovich from Truist.

Aaron Cyganovich, Analyst, Truist: Thanks. You mentioned in your press release that you expect that NII will or you anticipate that NII will fully cover the dividend over time. Maybe you could talk a little bit about timing associated with that or expectations as you go throughout the rest of the year?

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: Yes. So look, we have it’s a good question, Aaron, and welcome back to PennantPark and PFLT. We have three levers of NII growth at the company. Lever one is leveraging up to our target leverage ratio of about 1.5 times area. We’re below that as of quarter end.

So that’s lever number one. Lever number two is filling out PSSL one, that’s the Kemper JV. As we said, we’ve got some more capital to deploy there before that’s kind of full at this point in time. Of course, you can always grow these things once you get full, but that’s kind of lever number two. And then lever number three is the new Hamilton Lane JV PSSL As I just said, that’s probably twelve to eighteen month ramp.

So we think as we pull those levers one, two and three, will target covering certainly covering the dividend, if not more. You guys can do the model. You are an expert in modeling, but our model show that between those levers, can more than cover the dividend over time.

Aaron Cyganovich, Analyst, Truist: That’s helpful. Thanks. And credit quality continues to be very strong. Can you talk a little bit about what you’re seeing at the portfolio company level in terms of some of the metrics there in terms of EBITDA growth, etcetera?

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: Yes. Look, EBITDA continues to grow nicely in general, kind of mid to upper single digits overall. Certainly, it’s dependent on the underlying company, the industry, but you could see non accruals are relatively light. We hope to keep them that way. You can also see that we are keeping leverage level on both new deals and the overall portfolio low as well.

New deals 3.8 times debt to EBITDA, 2.6 times interest coverage. Overall portfolio 4.7 times debt to EBITDA, 2.5 times coverage. Very limited pick in this portfolio. That’s what happens when you keep leverage low. Again, we feel like we are among the lowest risk in the peer group, in addition to the fact that we still get covenants that are meaningful to protect the capital.

The portfolio is chugging along well. Of course, like any portfolio with 150 names or so, there’s going to be a few underperformers, and there are. But overall, we are seeing a relatively strong situation with the portfolio.

Aaron Cyganovich, Analyst, Truist: Great. Thanks, Art.

Conference Operator: We’ll move next to Christopher Nolan from Ladenburg Thalmann.

Christopher Nolan, Analyst, Ladenburg Thalmann: Hey, guys. Art, is the high or I guess, Rick, is the high level of unrestricted cash at quarter end going to be directed towards, the JV?

Rick Alordo, Chief Financial Officer, PennantPark Floating Rate Capital: Chris, good morning. That cash, some of it, yes, will be used for the JV. Quarter end tends to be a high collection period. So it’s just some part of that cash balance is just a timing from a cash management working capital perspective in terms of using it to deploy and fund new investments versus temporarily pay down debt waiting for new opportunities.

Christopher Nolan, Analyst, Ladenburg Thalmann: Great. And Art, strategically, given the comments you gave on the lending market, are you expected to see improved loan pricing power given what seems to be increased appetite for leverage by middle market companies?

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: Yeah. Thanks, Chris. And by the way, welcome back to to PennantPark as well. Good to see you back, you know, on the case. We we certainly hope so.

I mean, you know, spreads have certainly come down over the last year, year and a half. Today, four seventy five to five ’25 is kind of the range. We hope that an increased supply will give us an opportunity to maintain and then maybe, you know, maybe expand those spreads. Constitutionally, though, you know, kind of lessons learned over many years is credit first. So we’re generally okay if the credit’s excellent taking a a slightly lower spread, because, of course, non accruals are are really what what gets you and where the pain is felt in in these portfolios.

So we’re gonna be trying to get more spread if we can. At the same time, most importantly, excellent credit. So, hopefully, with more supply, there’ll be there’ll be an opportunity to get more spread, but, you know, of course, no guarantees.

Christopher Nolan, Analyst, Ladenburg Thalmann: Great. Thanks for that. Thanks for the welcome, and good to be covering you guys again soon.

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: Thanks, Chris.

Conference Operator: We’ll hear next from Healy Sheth from Raymond James.

Healy Sheth, Analyst, Raymond James: Good morning. Thanks for the question. So going back to the recent rebound in M and A activity, is there any sort of mix shift in terms of what’s in the pipeline or where dollars are being deployed, whether it’s the industries you’re investing in or whether it’s incumbent borrowers versus new borrowers or sponsor versus non sponsor?

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: Yeah. Great question, Healy. So, up to about a month ago, would have said it’s mostly incumbencies where we’re doing delayed drawdowns or add on loans to existing companies. Again, of our prototypical deals are where we start with a company that’s being bought from a founder, a family, an entrepreneur by a middle market private equity firm. It does between ten percent and twenty of EBITDA.

It’s a fragmented industry and the private equity firm wants to do a consolidation play in a fragmented industry, we come in, we provide the capital to do the initial deal and then add on loans whether delayed draw or otherwise to take that 10,000,000 to $20,000,000 EBITDA company up to 30,000,040 million 50,000,000 and above. And in that case, we become kind of a strategic partner where our capital is the fuel to drive that growth. We participate in the equity through the co invest. So there is kind of a built in equity upside to the package of what we deliver. So up until about a month ago, I would have said it’s virtually all add ons and delayed draws and that’s pretty good.

I mean we have a lot of incumbency. We have 190 some companies broadly throughout the platform, 158 in PFLT. So there’s just a lot of just incumbency and add ons with credits that you know and like and that’s great. And if we don’t like the creditor, we’re credits underperforming, we don’t have to give them the extra capital. So that’s really a built in competitive edge when you have portfolios of this size and scale.

I do I would say that in the last month, some new platforms have increasingly coming to us and we’ve been more active starting the new platforms again back with that smaller company with the add on acquisition pipeline and regenerating that. That’s kind of the difference in the last month. In PFLT in particular, it’s virtually all sponsors, sponsor deals again in our focus here capital preservation and yield the capital preservation first. So we like having a loan to value of 40% or 50%, which is typically what it is today. So that if there is a bump in the road, that sponsor capital provides the cushion and typically when they are putting in 50%, 60% of the equity from the get go, if there is a bump in the road, typically they will invest additional capital to solve that problem and we certainly saw that in spades during COVID when virtually every liquidity situation was solved with additional sponsor capital.

In terms of the industries, it’s the same old industries where we think we have domain expertise. Clearly, are shying away from tariff. We always shied away from tariff impact even more so today. But by and large, it’s the same industries.

Healy Sheth, Analyst, Raymond James: Got it. Thanks for the color. Appreciate it.

Conference Operator: And at this time, there are no additional callers in the queue. I’d like to turn the conference back over to mister Art Penn for any additional or closing comments.

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: I think there might be a question in the queue if we could, or may have gone away. Yeah. But it looks like there is.

Conference Operator: Looks we just had Paul Johnson from KBW.

Paul Johnson, Analyst, KBW: Thanks for, letting me on here, last minute. So I’ve I’ve I’ve hopped on a little late here. I apologize if you’ve already mentioned this on the call or if the question’s already been asked. It it looks like just kinda based on the ATM activity for the quarter that, you guys issued most likely most of the shares on the ATM. Pretty early in the quarter, the stock would have, you know, been trading at a, you know, bigger discount to NAV than than kind of where you guys trade today.

But you obviously have the history of subsidizing that that discount when you issue those shares. I’m just curious. I mean, is that something that you you would plan on, you know, doing going forward pretty regularly in terms of just kinda capital management just sort of or is there gonna be more, I guess, context around valuation of shares, I guess, going forward?

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: Yes. It’s a good question, Paul. And the answer is, of course, yes and yes. We did issue 32,000,000 shares, 2,800,000.0 shares at $11.31 That was a pre Liberation Day price. We were building our war chest for what we thought was going to be a very active 2025.

So between the ATM program and all the things that we were doing with our credit facility and the redialing of the securitizations. So our timing was good from the standpoint of issuing shares at a very attractive price pre Liberation Day. Unfortunately, the deal flow didn’t come after Liberation Day. We had sixty to ninety days of light deal flow. It seems to be picking back up again and we certainly think and are hopeful that the remainder of this year will be good and we can deploy that war chest that we built through the ATM program and through our credit facilities nicely here for the remainder of 2025.

As you know, ATM programs are very efficient. They are low cost. They tend to, at least the way we have done it, been surgical in terms of kind of how the stock trades. So we look at everything, we look at our deal flow, we look at the capital structure, we look at where the stock is trading and but right now we are as we speak very have a lot of capital as you can see between being under levered at PFLT and having two JVs that have available capital. So at least at this point, we’re set and we’re in good shape to now deploy all the capital that we raised.

Paul Johnson, Analyst, KBW: Thank you. Appreciate that. Very helpful. That’s all for me.

Conference Operator: And at this time, there are no additional callers in the queue. Mr. Penn, I’d like to turn the conference back over to you for any additional or closing comments.

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: Yes, I just want to thank everybody for participating today and wishing everybody a terrific remainder of summer. Our next quarterly earnings will be after ten Q, so later than normal because of the annual report. So it will be kind of mid to late November, probably right before Thanksgiving that we will talk to everybody next. Thank you for your time and support of PFLT.

Conference Operator: That does conclude today’s teleconference. We thank you all for your participation. You may

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