Earnings call transcript: PennantPark misses EPS forecast, Q1 2025

PennantPark Floating Rate Capital Ltd (PFLT) reported its Q1 2025 earnings with an earnings per share (EPS) of $0.28, falling short of the forecasted $0.32. The company also reported revenue of $61.94 million, below the expected $65.81 million. Following the earnings announcement, PennantPark’s stock experienced a decline of 1.37%, closing at $10.21, reflecting investor disappointment. According to InvestingPro data, the company maintains a robust P/E ratio of 7.47 and offers an impressive dividend yield of 12.05%, having maintained dividend payments for 15 consecutive years.

Key Takeaways

• EPS of $0.28 missed the forecast by $0.04.
• Revenue fell short by approximately $3.87 million.
• Stock price decreased by 1.37% in response to the earnings miss.
• Portfolio grew by 7% to $2.3 billion.
• Net Asset Value (NAV) decreased by 2.4% to $11.70 per share.

Company Performance

PennantPark Floating Rate Capital Ltd reported growth in its portfolio, which expanded by 7% to reach $2.3 billion. Despite this growth, the company’s financial performance was overshadowed by its inability to meet EPS and revenue forecasts. The firm invested $293 million across new and existing portfolio companies, maintaining a focus on the core middle market, which has been a strategic priority. InvestingPro analysis reveals strong financial health with a current ratio of 3.94, indicating excellent liquidity position. Subscribers can access additional insights through comprehensive Pro Research Reports, available for over 1,400 US stocks including PFLT.

Financial Highlights

• Revenue: $61.94 million, below the forecast of $65.81 million.
• Earnings per share: $0.28, missing the forecast of $0.32.
• Portfolio size: $2.3 billion, a 7% increase from the prior quarter.
• Net Asset Value: $11.70 per share, a 2.4% decrease from the previous quarter.
• Weighted average yield: 9.9%.

Earnings vs. Forecast

PennantPark’s EPS of $0.28 was $0.04 below the forecast, representing a miss of approximately 12.5%. This deviation from expectations is significant, considering the company’s historical trend of meeting or exceeding forecasts. Revenue also fell short by about 5.9%, contributing to the negative market sentiment.

Market Reaction

Following the earnings release, PennantPark’s stock price dropped by 1.37%, closing at $10.21. This decline reflects the market’s reaction to the earnings miss and the company’s lowered revenue figures. The stock’s performance is within its 52-week range, with a low of $8.82 and a high of $12.02, indicating moderate volatility. Despite recent challenges, InvestingPro data shows impressive revenue growth of 47.56% over the last twelve months, with 4 analysts revising their earnings estimates upward for the upcoming period.

Outlook & Guidance

Looking forward, PennantPark aims to ramp up its portfolio in an attractive vintage, targeting growth over the next 6 to 12 months. The company anticipates comfortably covering its dividend and continues to explore investment opportunities in the middle market. Despite the current challenges, PennantPark remains focused on its strategic initiatives.

Executive Commentary

Art Penn, CEO, emphasized the company’s mission of providing a steady dividend stream while preserving capital. He noted, "Our mission and goal are a steady, stable and protected dividend stream coupled with the preservation of capital." Penn also highlighted the company’s strategy of focusing on the core middle market, stating, "We wish the big players to raise a lot of capital, and we’d like them to continue to move up market, leave more room in the core middle market for us."

Risks and Challenges

• Market Volatility: The current environment is characterized by volatility, which could impact future earnings.
• Tariff Uncertainty: Ongoing tariff issues have slowed M&A activity, potentially affecting growth.
• Decreased NAV: A 2.4% decrease in NAV could signal underlying asset valuation concerns.
• Interest Rate Changes: Amendments to credit facilities and interest rates could impact financial performance.
• Competitive Pressures: The focus on the core middle market may face increased competition from larger players.

Q&A

During the earnings call, analysts questioned the motivations behind recent capital raising efforts and explored the potential for additional joint venture partnerships. The company addressed concerns about limited tariff exposure and reiterated its commitment to focusing on the core middle market.

Full transcript - PennantPark Floating Rate Capital (PFLT) Q2 2025:

Conference Operator: Morning, and welcome to the PennantPark Floating Rate Capital Second Fiscal Quarter twenty twenty five Earnings Conference Call. Today’s conference is being recorded. At this time, all participants have been placed in listen only mode. The call will be open for question and answer session following the speakers’ remarks. It is now my pleasure to turn the call over to Mr.

Art Penn, Chairman and Chief Executive Officer and PennantPark Floating Rate Capital. Mr. Penn, you may now begin your conference.

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

Rick Valordo, 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 the current market environment for private middle market lending and how the portfolio is positioned for the upcoming quarters. I’ll then discuss how we fared in the quarter ended March 31. And finally, highlight how our financial strength has been significantly enhanced through strategic capital raising activities during the quarter and over the last twelve months. Rick will provide a detailed review of the financials and then we’ll open up the call for Q and A.

With regard to the current market environment, despite continued volatility in the broader markets, we had a solid quarter, particularly given the seasonally slower start to the fiscal year. Our platform continues to prove its strength, enabling us to support our existing portfolio companies and private equity borrowers with strategic capital solutions to help grow their businesses. Approximately 80% of our originations came from existing borrowers, while 20% were from new platform investments, each one underwritten with attractive credit statistics and yields. Our ability to remain active and disciplined during uncertain periods reinforces the value of our long standing relationships and the breadth of our origination capabilities. Looking ahead, we expect originations to remain concentrated among existing portfolio companies with select opportunities from high quality new platforms.

In this evolving environment, pricing will likely increase and leverage will moderate as buyers and lenders adjust to a new risk framework. We believe the strongest assets, those with demonstrated growth and tariff resilience will still command premium valuations and attract sponsor interest. As always, we will remain rigorous in our underwriting and highly selective in pursuing new investments. Throughout the past year, we’ve taken significant steps to strengthen our balance sheet and enhance PFLT’s liquidity to maximize our ability to take advantage of current market opportunities. As is typically the case, market volatility creates opportunities and this upcoming vintage of loans is shaping up to be particularly attractive.

We continue to see attractive investments in the core middle market. During the quarter for investments in new portfolio companies, the weighted average debt to EBITDA was 4.3 times, the weighted average interest coverage was 2.3 times, and the weighted average loan to value was 39% with a yield to maturity of 9.9%. In the core middle market, the pricing on first lien term loans appears to have stabilized in the SERFR plus 500 to $5.50 range for high quality assets. As the credit statistics just highlighted indicate, we 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.

We continue to get meaningful covenant protections, while the upper middle market is primarily characterized as covenant light. With regard to how the current portfolio is positioned, over the past several weeks, our team has been closely evaluating the potential impact of tariffs across the portfolio. We are pleased to report that exposure is limited. As of March 31, the portfolio’s weighted average leverage ratio through our debt security was 4.2 times and the portfolio’s weighted average interest coverage was 2.3 times. We believe that this is one of the most conservatively structured portfolios in the direct lending industry and can withstand volatility in the current environment.

We continue to believe that our focus on the core middle market provides us with attractive investment opportunities where we provide important strategic capital to our borrowers. We have a long term track record of generating value by successfully financing growing middle market companies in five key sectors. These are sectors where we have substantial domain expertise, know the right questions to ask and have an excellent track record. They are business services, consumer, government services and defense, healthcare and software and technology. These sectors have been recession resilient, tend to generate strong free cash flow and have limited direct impact to the recent tariff increases and uncertainty.

The core middle market, companies with 10 to $50,000,000 of EBITDA, is below the threshold and does not compete with the broadly syndicated loan or high yield markets, unlike our peers in the upper middle market. In 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.

With regard to covenants, unlike the erosion in the upper middle market, virtually all of our originated first lien loans had meaningful covenants, which help protect our capital. Credit quality of the portfolio has remained strong. During the quarter, three new investments were added to the nonaccrual status and total nonaccruals represent only 2.2% of the portfolio at cost and 1.2% at market value. Subsequent to quarter end, two nonaccrual investments were put back on accrual and pro form a for these subsequent events, PFLT’s non accruals represent only 1% of the portfolio at cost and 0.5% at market value as of today. Pay in kind or PIK income is only 3% of interest income.

This is among the lowest in the industry and is a testament to the quality of our underwriting and our portfolio versus our peers. Our credit quality since inception over fourteen years ago has been excellent. PFLT has invested $7,600,000,000 in over 500 companies and we have experienced only 23 non accruals. 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 March 31, we’ve invested over $566,000,000 in equity co investments and have generated an IRR of 26% and a multiple on invested capital of two times. Moving on to how we fared in the quarter ended March 31, our core net investment income was $0.28 per share. If adjusted for the additional shares issued during the quarter, core NII would have been $0.30 per share.

We are looking forward to ramping the portfolio of both PFLT and the JV in this attractive vintage, which we believe will result in PFLT’s net investment income comfortably covering the dividend. As of March 31, our portfolio grew to $2,300,000,000 or up 7% from the prior quarter. During the quarter, we continue to originate attractive investment opportunities and invested $293,000,000 in three new and 54 existing portfolio companies at a weighted average yield of 9.9%. Throughout the past year, we’ve taken significant steps to strengthen our balance sheet in order to enhance our liquidity and maximize the company’s ability to take advantage of market opportunities. On the liability side of our balance sheet, over the last twelve months, we’ve increased our total leverage by $750,000,000 This was done through a combination of expanding and reducing the cost of our revolving credit facility and closing on a substantial new securitized financing.

Securitization financing continues to be a good match for our lower risk first lien assets. We believe that securitizations are attractive financing structures as they have a twelve year stated maturity and generally have four to five year reinvestment periods. In March, PFLT closed on a new $361,000,000 securitization financing with a weighted average spread of 1.59%, a four year reinvestment period and a twelve year final maturity. The ratio of external debt to PFLT’s junior capital was 3.2 times to one. In April, we amended the Truist revolving credit facility and reduced the interest rate on the facility to SOFR plus 200 from SOFR plus two twenty five.

The amendment also extended the revolving period of final maturity by one year to August 2028 and August 2030 respectively. Our PSSL joint venture has also taken significant strides in bolstering its financial strength as well. As of March 31, the JV portfolio totaled $1,100,000,000 and during the quarter invested $60,000,000 in four new and five existing portfolio companies at a weighted average yield of 9.8%, including 53,000,000 of assets purchased from PFLT. In April, again accessing attractive securitization financing, PSSL closed on a new financing at an attractive weighted average price of sulfur plus 1.71%. PSSL has $350,000,000 of additional committed capital, debt and equity capital and can grow its total portfolio to $1,500,000,000 We believe that the increase in scale of the JV’s balance sheet will continue to drive attractive mid teens return on invested capital and enhance PFLT’s earnings momentum.

Our financial strength was also substantially enhanced by attractive equity capital raised from our ATM program. Over the last twelve months, we have raised meaningful equity capital through this program. This includes $163,000,000 raised during the quarter ended March 31 from the issuance of 14,400,000.0 shares of our common stock at an average price of $11.33 per share. As a result of our capital activities over the last twelve months, PFLT has over $500,000,000 of available capital. That availability along with the JV having $350,000,000 of committed capital brings the total overall capacity of the platform to approximately $850,000,000 As a result, we believe that we are well positioned from both the defensive and offensive perspective in this current market environment.

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. We seek to find investment opportunities in growing middle market companies 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 the 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 detail.

Rick Valordo, Chief Financial Officer, PennantPark Floating Rate Capital: Thank you, Art. For the quarter ended March 31, GAAP net investment income was $0.28 per share and core net investment income was $0.28 per share. If adjusted for the additional shares issued during the quarter, core NII would have been $0.30 per share. Operating expenses for the quarter were as follows: interest and expenses on debt were $23,000,000 base management and performance based incentive fees were $11,900,000 general and administrative expenses were $1,850,000 and provision for taxes was $200,000 For the quarter ended March 31, net realized and unrealized change on investments including provision for taxes was a loss of $23,800,000 As of March 31, NAV was $11.7 per share, which is down 2.4% from $11.34 per share last quarter. As of March 31, 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 March 31, our key portfolio statistics were as follows. The portfolio remains highly diversified with 159 companies across 49 different industries. The weighted average yield on our debt investments was 10.5% and approximately 100 of the debt portfolio is floating rate. PIK income for the quarter equaled only 3% of total interest income. We had four nonaccruals, which represent 2.2% of the portfolio at cost and 1.2% at market value.

After quarter end, two of these nonaccruals came off nonaccrual and pro form a nonaccruals represent only 1% of the portfolio at cost and 0.5% at market value. The portfolio is comprised of ninety percent first lien senior secured debt, less than 1% in subordinated debt, 3% in equity of PSSL and 7% in other equity. Our debt to EBITDA ratio on the portfolio is 4.2 times and the interest coverage was 2.3 times. Now let me turn the call back to Art.

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: Thanks Rick. In closing, I’d like to thank our dedicated and talented team of professionals for their continued 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

Conference Operator: And our first question is going to come from Robert Dodd from Raymond James. I

Robert Dodd, Analyst, Raymond James: apologize for the background noise to start with. On the equity raising during the quarter, were you seeing a was this kind of like just a long term capital build? Or were you seeing a increase in pipeline activity? Because I mean, the beginning part of the year, right, people were more optimistic pre Liberation Day? Which kind of how would you characterize kind of the motivation there?

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: Yes. So it’s a great question. Look, we had a very robust 2024 originating about $4,000,000,000 across the entire PennantPark platform including PFLT. And we were gearing up to have a very robust 2025 again. So the ATM raise, along with all these debt capital raises, the securitization, redialing the credit facility, were setting the table for a robust 2025.

And then Liberation Day happened and kind of, you know, activity slowed down substantially. And that’s left us in a really good position though. You know, we we raised all this capital, kind of the ATM, we raised the capital on average stock price of $11.33 per share, which is in excess of quarter end NAV. So that was accretive. Quarter end NAV ended up 11.07 So it turned out that we really raised this kind of really nice war chest.

And we’re hoping that now that the tariff situation seems to be clearing up a bit, we will be able to deploy that capital and ramp into it over the coming six to nine to twelve months. Activity even in a normalized environment, there’s always activity in the core middle market. So we’re hopeful we do that over the next time period.

Robert Dodd, Analyst, Raymond James: Got it. I appreciate that color. On on on that, that’s, Liberation Day, China. If you change the landscape, I mean, what what do you think is necessary to unlock for for kind of platform M and A? I mean, in the prepared remarks, you said, you know, expect to be first of be follow on in the near term to existing borrowers.

I mean, is it is it just certainty in tariffs or is it tariffs returning ballpark to where they were pre Liberation Day? I mean what does it take to unlock new M and A activity in your market?

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: Yes. So as I said, most of our the tariff exposure to the portfolio is very limited. We’re in things like healthcare and government services and defense and other areas that really are not impacted by tariffs. So it’s really been the uncertainty that has slowed things down. And certainly tariff impacted deals are going to be it’s going take a while for those to rev back up.

That I think will require certainty of tariffs. I think for the non tariff you know, non tariff related names, it’s just gonna be certainty of the environment and and so people can start making decisions again. We’re starting to see some activity, not a flood by any any stretch, but we’re starting to see some stabilization. We’re starting to get more active. It’s early days, though.

Robert Dodd, Analyst, Raymond James: Got it. Got it. One last one, I On the non accrual restructurings first quarter I assume there was some excitation of debt in there. So of the income production that was put on non accrual, how much of the income production comes back? And obviously, all the assets going off non accrual, what kind of income rebound would we expect from from those restructurings?

That’s

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: Yeah. So yeah. So when you when you add them up, it’s, it’s ZiPS, which, has done its restructuring. It’s four wall, which the restructuring will will be done in the next couple weeks. It’s integrated nutrition, which has been done and completed.

On a run rate basis, you get back about 60% of your income that you lost and adds up to about a penny a share on a run rate basis. So, you know, the way we look at it is adjusting for the ATM, we were at 30¢ a share up from 28. You add the penny of run rate on the non accruals that gets you to 31, so you’re covering your dividend, and you’re still under levered. You’re kind of 1.3 times leverage. Our target leverage is 1.5 times and that doesn’t include the growth of the JV PSSL, which has substantial capital to grow $350,000,000 So kind of we’ve reloaded the balance sheet at very attractive terms, both debt and equity and are looking forward to we don’t even need to ramp to cover the dividend.

We just need to get through these non accruals and then ramping more. That’s why we said we believe we can comfortably cover the dividend as we ramp into this vintage. You.

Conference Operator: And our next question is going to come from Mark Hughes from Truist. Please go ahead.

Mark Hughes, Analyst, Truist: Yes. Thank you. Good morning. The activity with existing borrowers, I think you said that ought to be sustained. How much of that is say repricing versus growth capital?

And is that at an elevated level relative to historical terms? Or is it just that the new platform activity is low and so this is the existing borrowers are dominating those originations?

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: Yes. That’s a great question, Mark. On the repricings, that ended. Liberation Day put an end. I guess that’s a good news for Liberation Day put an end to the repricings.

So spreads have started to move back up, call it 25 to 50 basis points from pre Liberation Day. So the vast majority of the activity is existing platforms that are growing. As we’ve discussed, a prototypical deal for us in the core middle market is a company that starts out at 10,000,000 to $20,000,000 of EBITDA with a sponsor who wants to grow the company, in many cases, through add on acquisitions. It’s a fragmented industry. We give them the debt to do the initial acquisition.

We co invest in the equity because, by and large, the growth is locked. I mean, these companies are going to grow and we arrange for a delayed draw or incremental term loan to fuel that growth. So the vast majority of the add ons are taking 10 or $20,000,000 EBITDA companies, taking them to thirty, forty, 50 and above. They get sold or the upper market guys take us out with covenant light deal. We wish them the best.

We have a residual equity co investment. And hopefully that residual equity co investment gets monetized at some point.

Mark Hughes, Analyst, Truist: Very good. And then this question of kind of core middle market versus larger businesses. I think you’ve been pretty consistent on your view that the credit in the core middle market is very good for the reasons you’ve articulated. The same thoughts around tariff. I think you mentioned that the you know, when you’re doing health care, it’s not gonna be much impacted by tariffs.

But any just general observations about tariff sensitivity for your portfolio versus larger businesses?

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: Yes. So I mean, with our industry groups, which are the five we’ve talked about, by and large, they’re not. The only one where it might touch is consumer and in particular consumer goods, or there’s consumer goods that are manufactured overseas in particularly China. Most of those companies, you know, this first Trump administration had already moved to Vietnam and other jurisdictions. But again, it’s a very limited part of the portfolio.

And again, all of these companies in whatever sector are always structured in a way where leverage is low, the loan to value is attractive, and can withstand, you know, stress whether it be recessionary stress or or any kind of shock. So, you know, we think it’s a very limited piece of the portfolio. And, you know, and again, most of these companies already made their moves from the first Trump administration. Thank you very much. Thank you.

Conference Operator: And our next question is going to come from Mickey Schleien from Ladenburg. Please go ahead.

Mickey Schleien, Analyst, Ladenburg: Yes. Good morning, Art. I wanted to start by asking you at a high level how you feel about the equilibrium in the private credit market that you target for PFLT. You know, I I think you said in your prepared remarks that you’re seeing stabilization of pricing. But at the same time, there’s just huge buildup of capital, particularly, by, private BDCs.

So just wanna understand how, you know, sticky you think these spreads are that, we’re currently seeing.

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: Yes. So again, we’re focused on the 10 to $50,000,000 of EBITDA. The mega players have moved far upmarket from that. They’re competing with a broadly syndicated loan market, providing covenant light direct loans. And if you think about the business model, of course, it makes sense for them to write big checks to big companies.

That’s the business model of those players. And most of the capital raised, private or public, is by many of those big players. So those big guys keep getting bigger. God bless, you know, that should create more opportunity for those of us focused on the core. If our range today is 10,000,000 to 50,000,000 of EBITDA, maybe that will be 10 to $75,000,000 of EBITDA a year or two from now as those folks raise additional capital because their business model just doesn’t move the needle for them to write a check to a 20,000,000 or $30,000,000 EBITDA company enough when they’re managing that kind of AUM.

So we wish them all the best. We want them to raise a lot of capital, and we’d like them to continue to move up market, leave more room in the core middle market for us. And there’s a handful of other people we see day in and day out who are our peers and our colleagues, who we club deals with, who we compete with. And those are the same old players. Generally, the competition is what we call rational.

And, you know, we’re we’re pleased for the big to get bigger because it leaves leaves more room for us.

Mickey Schleien, Analyst, Ladenburg: Thanks for that, Art. That’s quite helpful. And touching on the senior loan fund, if I’m not mistaken, PFLT has about a $66,000,000 unfunded equity commitment to the fund. Looks like you’ve finished your debt funding. How quickly do you expect to inject that additional equity into the senior loan fund?

Doug Carter, Analyst, UBS: Yeah. Yeah. So in general, you know,

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: as I’ve said, we have about 850,000,000 of comprehensive capital in the in PFLT platform, 500 to PFLT and $3.50 at the at the joint venture. And we think, look, obviously, depends on M and A, right? M and A was put on pause to a large extent on Liberation Day. But as you know, the core middle market keeps moving. It’s not like we’re unlike the upper market, we’re not subject to the big cap M and A, which can be lumpier.

There’s always core market M and A. So six to twelve months is always a good time frame for us to deploy our excess capital as a general range.

Mickey Schleien, Analyst, Ladenburg: And

Conference Operator: our last question is going to come from Doug Carter from UBS.

Doug Carter, Analyst, UBS: Also, question on the senior loan fund. I know you have excess financing capacity there today. But I guess how do you think about the longer term opportunity to either continue to grow that relationship or possibly add other partners?

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: That’s a great question. Look, the JV and this BDC, PFLT and our JV and our sister BDC, PNNT, have been really helpful to shareholders from the standpoint of creating incremental return on investment, ROE, return on equity. They’ve generated very strong returns over time. So we’re going to continue to, it can be an end of both, either grow this JV and potentially add another one over time. You know, you have to find the right partner who’s simpatico with you on kinda how you see credit and being able to make investment decisions that are similar and to move in the time frame that our borrower clients need to.

We found two, one in each BDC, and it’s quite conceivable over time we’re to add another JV partner to this BDC, PFLT.

Doug Carter, Analyst, UBS: Great. Appreciate it. Thank you, Ward.

Conference Operator: And that concludes today’s question and answer session. I’d now like to turn the conference back over to Art Penn for additional or closing remarks.

Art Penn, Chairman and Chief Executive Officer, PennantPark Floating Rate Capital: Just want to thank everybody for being on the call today and for your interest in PFLT. We look forward to speaking to you next in early August after the next earnings report. The meantime, wishing everybody a terrific spring and early summer. Have a great day.

Conference Operator: And this concludes today’s call. Thank you for your participation. You may now disconnect.

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