Prospect Capital Corporation Reports Fiscal Q1 2024 Financial Results
Intellectia.AI2024-11-09
Prospect Capital Corporation Reports Fiscal Q1 2024 Financial Results
Prospect Capital Corporation (NASDAQ: PSEC) announced its financial results for the fiscal quarter ending September 30, 2024.
Key Financial Metrics
| Metric | Current Quarter | Year-over-Year Change | Quarter-over-Quarter Change | Wall Street Estimates |
|---|---|---|---|---|
| Total Revenue | $208.4 million | +5.4% | +3.2% | $204.76 million |
| Earnings Per Share (EPS) | $0.19 | +11.8% | -5.0% | $0.17 |
Prospect Capital exceeded analyst expectations for both revenue and EPS. The year-over-year growth in revenue was driven by an increased focus on core business segments, offset slightly by a reduction in CLO equity holdings.
Segment Performance
| Segment | Revenue Q1 2024 | Previous Guidance | Change from Guidance |
|---|---|---|---|
| First Lien Senior Secured Loans | $135 million | $130 million | +3.8% |
| CLO Equity | $12.5 million | $15 million | -16.7% |
| Real Estate Investments | $24.9 million | $20 million | +24.5% |
The shift towards first lien senior secured lending, which now constitutes 65% of total investments, significantly boosted revenue. This focus aligns with the company’s strategy to reduce investment variability and enhance income stability.
Key Developments
- Rightsizing of common shareholder distribution rate amid continued business strategy execution.
- Rotation into lower variability investments has increased interest income as a percentage of total income to 94%.
- Declared quarterly dividends for February, March, and April 2025.
Executive Comments
John Barry, CEO, highlighted the ongoing strategic rotation from structured credit and real estate investments towards a core business of first lien senior secured loans, which provides higher income stability. He mentioned that despite CLO equity's attractive yields, the variability necessitates a strategic pivot to more predictable income streams. Grier Eliasek, President, emphasized the competitive advantage of middle-market loans, citing a 700 basis points increase in first lien loans over the past year.
Dividends and Share Repurchase Program
Prospect declared expected common shareholder distributions for February, March, and April 2025. Cumulative dividends since inception have reached $21.25 per share.
Market Reaction
Following the earnings release, Prospect Capital's stock experienced a decline of approximately 14.63%, reflecting investor reactions to the strategic realignment and financial results.
Prospect Capital continues to navigate its business strategy emphasizing lower-risk and stable revenue investments, providing a clear path for sustainable shareholder returns.
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