PennantPark Investment Corporation (NYSE:PNNT) Q2 2022 Earnings Conference Call May 5, 2022 12:00 PM ET

Company Participants

Art Penn – Chairman and Chief Executive Officer

Richard Cheung – Chief Financial Officer

Conference Call Participants

Paul Johnson – KBW

Robert Dodd – Raymond James

Mickey Schleien – Ladenburg

Melissa Wedel – JPMorgan

Operator

Good afternoon, and welcome to the PennantPark Investment Corporation's Second Fiscal Quarter 2022 Earnings Conference Call. Today's conference is being recorded. At this time all participants have been placed in a listen-only mode. The call open will be open for a question-and-answer session following the speakers’ remarks. [Operator instructions]

It is now my pleasure to turn the call over to Mr. Art Penn, Chairman and Chief Executive Officer of PennantPark Investment Corporation. Mr. Penn, you may begin your conference.

Art Penn

Good afternoon, everyone. I'd like to welcome you to PennantPark Investment Corporation's second fiscal quarter 2022 earnings conference call. I'm pleased and I am joined today by Richard Cheung, our Chief Financial Officer. Richard, please start off by disclosing some general conference call information and include a discussion of our forward-looking statements.

Richard Cheung

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 Investment Corporation, and any unauthorized broadcast of this call in any form is strictly prohibited. Audio replay of the call will be available by using the telephone numbers and PIN provided in our earnings press release as well as 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

Thanks, Richard. I'm going to spend a few minutes discussing how we served in the quarter ending March 31st, how the portfolio is positioned for the upcoming quarters, our capital structure and liquidity, the financials then open up for Q&A. From an overall perspective in this era of inflation, rising interest rates and geopolitical risk, we believe we are well positioned as a lender focused on the United States where the floating rates on our loans can protect against rising rates in inflation. We are pleased to be lending into the core middle market where we are important strategic capital to our borrowers and are [indiscernible]. We believe we are additionally well positioned as a company that has a clear game plan for growth of net investment income and dividends. The highlight of the quarter ending March 31st was the sale of Pivot Physical Therapy, which generated cash proceeds of $232 million, our second lien position, which had a cost of $49 million exceeded for cash proceeds of $78 million resulting in an IRR of 14.3% and a multiple on invested capital of 1.6x. Our common and preferred stock investment, which had a cost of $35 million was exited for $164 million resulting in a 40% IRR and a multiple on invested capital of 3.3x.