Q4 2024 PennantPark Investment Corp Earnings Call
Please stand by.
Speaker Change: Good afternoon, and welcome to the Penn and Park Investment Corporation's fourth fiscal quarter 2024 earnings conference call. Today's conference is being recorded. At this time, all participants have been placed in a listen-only mode.
Speaker Change: The call will be open for a question and answer session following the speaker's remarks. If you would like to ask a question at that time, simply press star 1 on your telephone keypad.
Speaker Change: If you would like to withdraw your question, press star two on a telephone keypad. It is now my pleasure to turn the call over to Mr. Art Penn, Chairman and Chief Executive Officer of Pennant Park Investment Corporation. Mr. Penn, you may begin your conference.
Speaker Change: Good afternoon, everyone. I'd like to welcome you to Penn Park Investment Corporation's fourth fiscal quarter 2024 earnings conference call. I'm joined today by Rick Allorto, our Chief Financial Officer. Rick, please start off by disclosing some general conference call information and include a discussion about forward-looking statements.
Rick Allorto: 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 Penn and Park Investment Corporation and that any unauthorized broadcast of this call in any form is strictly prohibited.
Speaker Change: An audio replay of the call will be available on our website.
Speaker Change: I'd also like to call your attention to the customary Safe Harbor disclosure in our press release regarding forward-looking information.
Speaker Change: We do not undertake to update our forward-looking statements unless required by law.
Speaker Change: To obtain copies of our latest SEC filings, please visit our website at pennandpark.com or call us at 212-905-1000.
Speaker Change: At this time I'd like to call turn the call back to our Chairman and Chief Executive Officer Art Penn
Art Penn: Thanks, Rick. We're going to spend a few minutes and comment on the current market environment for private middle market credit.
Art Penn: how we fared in the quarter ended September 30th, how the portfolio is positioned for the upcoming quarters, a detailed review of the financials, then open it up for Q&A.
Art Penn: For the quarter ended September 30th, our gap in core net investment income was $0.22 per share.
Art Penn: Gap in adjusted NAV increased 0.5% to $7.56 per share from $7.52.
Art Penn: The increase in NAV for the quarter was due primarily to net positive valuation adjustments in the investment portfolio.
Art Penn: As of September 30th, our portfolio totaled $1.3 billion, and during the quarter we continued to originate attractive investment opportunities and invested $192 million in 12 new and 44 existing portfolio companies at a weighted average yield of 11.4 percent.
Art Penn: We continue to see an attractive vintage in the core middle market. For investments in new portfolio companies, the weighted average debt to EBITDA was 3.6 times, the weighted average interest coverage was 2.4 times, and the weighted average loan-to-value was 36%.
Art Penn: As of September 30, the portfolio's weighted average leverage ratio through our debt security was 4.5 times and the portfolio's weighted average interest coverage ratio was 2.0 times.
Art Penn: These attractive credit statistics are testament to our selectivity, conservative orientation, and our focus on the core middle market.
Art Penn: During 2024, the market yield on first lien term loans has tightened 50 to 75 basis points.
Art Penn: As the credit statistics just highlighted indicate, we continue to believe that the current vintage of core middle market directly originated loans is excellent.
Art Penn: and the core middle market leverages lower, spreads are higher, and covenants are tighter than in the upper middle market. Despite covenant erosion in the upper middle market, in the core middle market we are still getting meaningful covenant protections.
Art Penn: During the quarter, PNNT's joint venture, PSLF, accepted $127 million of additional capital commitments from PNNT and its JV partner.
Art Penn: PNNT committed $52.5 million and the JV partner committed $75 million.
Art Penn: In addition, the JV increased its senior secured credit facility from $325 million to $400 million.
Art Penn: This additional capital will allow the JV to scale its investment portfolio to over $1.5 billion, representing a nearly $500 million increase in the JV's investment capacity.
Art Penn: At September 30th, the JV portfolio equaled $1 billion, and during the quarter the JV invested $146 million, including $105 million of purchases from PNNT.
Art Penn: Over the last 12 months, PNNT earned a 19.2% return on invested capital in the JV. We expect that with continued growth in the JV portfolio, the JV investment will enhance PNNT's earnings momentum in future quarters.
Art Penn: The credit quality of P&NT's investment portfolio remains strong. We had only two non-accruals as of September 30th. Non-accruals represented 4.1% of the portfolio cost and 2.3% at market value.
Now let me turn to the current market environment.
Art Penn: We are well positioned as a lender focused on capital preservation in the United States. We continue to believe that our focus on the core middle market provides the company with attractive investment opportunities where we provide important strategic capital to our borrowers.
Art Penn: 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.
Art Penn: healthcare and software and technology. These sectors have also been recession resilient and tend to generate strong free cash flow.
Art Penn: The core middle market, companies with 10 to 50 million of EBITDA, is below the threshold and does not compete with the broadly syndicated loan market or the high yield markets, unlike our peers in the upper middle market.
Art Penn: 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.
Art Penn: Additionally, from a monitoring perspective, we receive monthly financial statements to help us stay on top of the companies.
Art Penn: With regard to covenants, unlike the erosion in the upper middle market, virtually all of our originated first lien loans have meaningful covenants which help protect our capital. This is a significant reason why we believe we are well positioned in this environment.
Art Penn: Many of our peers should focus on the upper middle market state that those bigger companies are less risky.
Art Penn: That is a perception and may make some intuitive sense, but the reality is different. According to S&P, loans to companies with less than 50 million of EBITDA have a lower default rate and higher recovery rate than loans to companies with higher EBITDA.
Art Penn: We believe that the meaningful covenant protections of the core middle market, more careful diligence, and tighter monitoring have been an important part of this differentiated performance.
Art Penn: As a provider of strategic capital who fuels the growth of our portfolio companies, in many cases we participate in the upside of the company by making an equity co-investment.
Art Penn: Our returns on these equity call investments have been excellent over time. Overall, for our platform, from inception through September 30th, we invested over $540 million in equity call investments and have generated an IRR of 26% and a multiple on invested capital of two times.
Art Penn: Since inception nearly 17 years ago, PNNT has invested $8.3 billion at an average yield of 11.3% and has experienced a loss ratio on invested capital of approximately 20 basis points annually.
Art Penn: This strong track record includes investments of primarily subordinated debt investments made prior to the global financial crisis, legacy energy investments, and more recently, the pandemic.
Art Penn: With regard to the outlook, new loans in our target market are attractive. Our experienced and talented team and our wide origination funnel are producing attractive deal flow.
Art Penn: Our continued focus remains on capital preservation and being patient investors.
Art Penn: We want to reiterate our goal to generate attractive risk-adjusted returns through income, coupled with long-term preservation of capital.
Art Penn: We seek to find investment opportunities in growing middle market companies that have high free cash flow conversion.
Art Penn: We capture that free cash flow primarily through debt 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.
Rick Allorto: Thank you, Art. For the quarter ended September 30th, GAAP and Core Net Investment Income was $0.22 per share.
Rick Allorto: Operating expenses for the quarter were as follows, interest and credit facility expenses were $12.3 million.
Base management and incentive fees were $7.4 million.
Rick Allorto: General and administrative expenses were 1.75 million and provision for excise taxes were 0.7 million.
Rick Allorto: For the quarter ended September 30th, net realized and unrealized change on investments and debt, including provision for taxes, was a gain of $4 million.
Rick Allorto: As of September 30th, our gap and adjusted NAV was $7.56 per share, which is up 0.5% from $7.52 per share in the prior quarter.
Rick Allorto: As of September 30th, our debt-to-equity ratio was 1.57 times, and our capital structure is diversified across multiple funding sources, including both secured and unsecured debt.
Rick Allorto: As of September 30th, our key portfolio statistics were as follows.
Rick Allorto: The portfolio remains highly diversified, with 152 companies across 33 different industries.
The weighted average yield on our debt investments was 12.3%.
Rick Allorto: We had two non-accruals, which represent 4.1% of the portfolio at cost and 2.3% at market value.
The portfolio is comprised of 55% first lien secured debt.
5% second lien secured debt
9% subordinated notes to PSLF
5% other subordinated debt
6% equity in PSLFs.
and 20% in other preferred and common equity.
94% of the debt portfolio is floating rate.
Rick Allorto: and the debt to EBITDA on the portfolio is 4.5 times and interest coverage is 2 times.
Now, let me turn the call back to Art.
Art Penn: Thanks Rick. In closing I'd like to thank our dedicated and talented team of professionals for their continued commitment to PNNT and its shareholders. Thank you all for your time today and for your continued investment and confidence in us.
Art Penn: That concludes our remarks. At this time, I would like to open up the call to questions.
Speaker Change: Thank you. If you would like to signal with questions, please press star one on your touchtone telephone. If you're joining us today using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment.
Thank you. Good afternoon.
Speaker Change: The investment activity so far in the fourth quarter, I'm not sure if you gave any specifics on that, but what have you seen so far?
Speaker Change: Yeah, thanks Mark. You know, we've been active, you know, kind of with PNNT's current situation, you know, PNNT's kind of pretty fully leveraged here at about one and a half times.
Speaker Change: Our long-term target leverage is targeting about 1.25 to 1.3 times, so...
Speaker Change: What PNNT does is it basically, you know, buys deals and seasons them and then, you know, at some point the JV will then purchase those deals. So the growth of the portfolio in PNNT.
Speaker Change: is really going to come through the JV at this point.
Speaker Change: So it's kind of been more of a, you know, steady state at PNNT and the new deals, the new opportunities, given the leverage, are going to be shifted over to the JV when appropriate. So kind of ins and outs are monitored very closely and we've been active but we're also getting repayments.
Speaker Change: Yeah, okay. And then you described kind of high teens returns on the JV. Anything structurally that should influence that? Is that kind of sustainable? Is there decent visibility for those sort of returns? Are there any?
and other market factors that maybe influence that.
Speaker Change: Sure, you know, it's a lot of the first lean deals that we originate across our platform, lower leverage.
Speaker Change: Lower risk type deals and then as they go into the JV they get levered up a little bit more than they would on a BDC balance sheet.
you know, kind of two-to-one debt-to-equity ratio range.
and we use credit facilities, we use CLO technology.
Speaker Change: to finance those loans. So certainly, it's the same thing as a BDC balance sheet. If interest rates come down, the returns on that JV will come down. These are mostly or virtually all floating rate loans.
Speaker Change: Granted, the cost of liabilities will come down as well. And then credit performance. We've had excellent credit performance in the JV. Hopefully, we continue to have excellent credit performance.
Speaker Change: But a combination of interest rates and credit performance would be the key areas that you'd watch for that 19% return coming down.
https://www.kenhub.com
Speaker Change: Very good. And then thinking about the credit stats this quarter, the I think 3.6 percent or 3.6 times debt to EBITDA and then seems like a loan to value also pretty attractive. At the same time you're getting a little bit of spread compression.
Speaker Change: What are you seeing just in terms of those leverage numbers? They seem pretty good. Is that sustainable or you might see those move up a bit?
Speaker Change: And as we say, you know, typically we'll start out with a company that's
Speaker Change: You know a platform for growth or acquisition, so we'll finance a 10 or 15 or 20 million dollar company
Speaker Change: Once a little smaller, we might keep leverage a little tighter as the company grows to 20, 30, 40 VBDA, gets a little bit bigger, maybe the leverage will go up a little bit as it does add-on acquisitions and draws down the delay draw facilities.
Speaker Change: So that's the typical life cycle of one of our deals. We'll start out smaller, but keep leverage tight.
Speaker Change: give them a DDTL to grow, co-invest in the equity to participate in that growth, company gets bigger, you know, ends up at four, four and a half times leverage and then as it gets to 40 or 50 of EBITDA or greater, it moves off to the to the upper middle market.
Appreciate that. Thank you.
Speaker Change: And the next question will come from Robert Dodd with Raymond James.
Robert Dodd: Morning, hi guys. On the outlook in terms of, you know, sectors, I mean, you mentioned five key sectors. I mean, when I look at the ads this quarter, I think
Robert Dodd: Three or four of them were health care mostly and then business services only one government slash defense What what are the ones that the look
Robert Dodd: appealing to you going forward in the 2025 maybe with taking into account obviously change in administration coming etc I mean which which areas do you expect to remain attractive?
Speaker Change: Yeah, look, I think there are two biggest sectors, and some of those business services might, as you look under the cover, be a little bit more government services or defense.
Speaker Change: Look, healthcare has been a good sector for us. Some of our peers have stumbled a little bit in that space.
I think we generally tend to keep leverage.
Speaker Change: lower than some of our peers, you know, maybe we're financing smaller companies that lower leverage with tighter covenants, don't know, but you know we've selected areas in health care where
Speaker Change: The tailwinds are behind us. The reimbursement risk may be a little lower, and importantly, we keep leverage lower.
Speaker Change: And demographically, healthcare is just going to continue to be a big portion of our economy. You almost can't avoid it.
Speaker Change: the aging of our population. So we're going to continue to do a bunch in health care. We're going to be very selective about which pieces of the industry and then keep leverage low.
Speaker Change: Government services and defense continue to be, you know, an important part of the economy. The geopolitical outlook remains uncertain.
Speaker Change: Certainly, with Doge coming in and taking a look at all government expenses, we'll see how that plays out. As taxpayers, we of course want our tax dollars to be spent efficiently.
Speaker Change: But typically in defense government services were financing service businesses where human beings walk into an office building and sit behind computers.
Speaker Change: whether that be cyber security, intelligence, you know, other kind of, you know, non-heavy asset areas.
Speaker Change: that we think will continue to be really important, given the geopolitical risk that's in the market. But it's really hard to handicap what the Doge effort is going to mean.
Speaker Change: and you know kind of again we just try to keep leverage low I don't know how many of our peers have a portfolio that has a debt tibidac kind of in the mid fours and has new loans in the mid threes debt tibidac I don't think there's very many
Speaker Change: So, for us, that's been our tactic, our strategy, and we're okay, you know, we're okay keeping lower leverage and accepting a lower yield.
Speaker Change: and with the advent of being able to efficiently finance those loans either on the balance sheet of the BDC or in a JV, where leverage can be optimized a little bit more.
Speaker Change: and we can manage more assets on behalf of the shareholder and not charge a management fee for managing those assets and be able to punch out a mid-to-upper teens in return. We think that's a very good model for PNNT.
Speaker Change: Got it, thank you. On that, you know, the spread question, I mean they have come down, you mentioned in your prepared remarks, I mean where, where do you, do you think it's at a bottom, you know, that the spread compression is kind of leveled out given, you know,
Speaker Change: or do you think there's, you know, the returns on First Lean are still really, really attractive. I mean, double-digit yields on First Lean, even with spreads where they are right now. So, I mean, do you think there's room for them to come down further, or is this the bottom, or what's that?
Speaker Change: Yeah, great question. We think they've plateaued here. You know our deals are typically right now on the senior side 5 to 550 spread over the risk-free rate.
Speaker Change: seems to have plateaued. If deal supply gets even heavier, perhaps we have a chance as an industry or in the core metal market to be able to increase spread a little bit if there's heavy supply. That wouldn't be so bad.
Speaker Change: Again, credit, credit, credit. That's got to be most important. If we can reduce mistakes, the rest of it will take care of itself. So, we're not modeling an increase in spread. And right now, we don't think there will be any tightening.
Speaker Change: And on a relative value, if you look at the BSL market, in a BSL market, it's kind of 350, you know, spread. So if we're at 550, BSL's 350. From a relative value standpoint, we still think it's attractive.
Got it. Thank you.
Thank you.
And moving on to Paul Johnson with KBW.
Good morning, good afternoon. Thanks for taking my questions.
Speaker Change: So on the JV, very strong return once again this quarter. It's been a great
Speaker Change: Can you kind of give, you know, your thoughts around just, you know, sustainability, you know, that current distribution rate? I mean...
Speaker Change: and, you know, some sort of any sort of sensitivity around, you know, interest rates and what would happen with net interest income in the JV.
Yeah, you know, it's a great question.
Speaker Change: and certainly our track record in the JV to date is really good.
We've had very minimal amount of crawls.
Speaker Change: Look, you have to kind of say, let's build in some cushion in that, if you were to kind of say, okay, long run, we're four or maybe five years into that JV, can we sustain that? I certainly hope so.
Speaker Change: Certainly, over time, we have nonaccruals, and we should, you know, we should model those in. For PNNTO over many years, it's been a 20 basis point annualized.
Speaker Change: The ammunition of return due to non-equals of PFLT in the JV portfolio is a little bit closer to the PFLT first lien portfolio. It's been 10 basis points annualized.
Speaker Change: Certainly as interest rates come down, it's going to be sensitive to that. So those are the two things you'd model in.
Speaker Change: Is 19% going to come to 17% or 15% at some point? It's quite possible, you know. It's hard to guarantee 19% forever. I mean, I certainly hope we can...
Speaker Change: absolutely sustainable and pound the table. But certainly the way we've been investing in senior debt and how we've been using leverage at the JV level including securitization CLR leverage, we should still be able to get an opportunity to return on that capital.
Speaker Change: And what is the idea around leverage? I think last quarter was around 2.1 times or so in the JV. Is the idea to continue to increase that as rates decline? Is that kind of near its sort of max target leverage? What's the idea?
Speaker Change: Yeah I think that I think two to one, two and a quarter to one is probably the relevant zone at this point.
Again, these are the same exact assets that...
Speaker Change: that we use across our platform, PFLT, and it's JB who gets these first lien assets.
It's important to note that we have a CLO business.
Speaker Change: A third party CLO business in the same assets are in middle market CLOs where the equity gets leveraged 3 or 4 to 1.
Speaker Change: And those are very strong, good structures. We are going to price our CLO10.
Speaker Change: shortly in the coming days, and if you look at third-party research on middle market CLOs, thankfully Penn and Park is one of the top three quarter after quarter in terms of performance.
Speaker Change: and Middle Market CLOs. It's because the performance of the underlying assets so far has been very good, and it's the same assets that are in our JVs and in PFLT. So these assets could be safely leveraged 3 or 4 to 1. In the JV right now, we're focused on 2, 2.25 to 1.
Speaker Change: Thanks for that. I mean, can I just ask about the amendment this quarter in the JV? It looks like you made an amendment that allows parties to potentially redeem their interests. What's the idea with that?
new partners in.
Speaker Change: Yeah, that was just kind of in line with the updated...
Speaker Change: agreement we have with our JV partner. They were bringing more capital in as part of that. They just wanted to clarify entry and exit.
You know mechanics
Speaker Change: So there's a potential that this really could just be an evergreen vehicle and their limited partners can come in and exit on an hourly basis if they want to continue to be in this vehicle.
Speaker Change: Thanks for that. And then, on the non-accruals, in the filing, you know, it says there's two companies on non-accrual. However, you know, if I pull up the number of companies on partial non-accruals, there's a few more.
4, Nonacrol
Was there any specific?
Rick, do you want to handle that one?
Rick Allorto: Thanks, Paul. There's one company, it's called Pragmatic, that's on partial non-accrual. Based upon the valuation, which is in the low 60s, it is currently paying pick interest.
Rick Allorto: So we're accruing to that mark of 60 Because the enterprise value of the company is not you know, it's it's it's basically at 100% loan to value. So we're Reserving for that portion that exceeds
the enterprise value and then therefore collectability.
Speaker Change: Appreciate that. And then just a few more, if you may.
Speaker Change: Within the portfolio, you know, what would you say I guess is the refinancing opportunity that's still Left in the portfolio at this point. I mean, how what would you see is kind of like the balance between
Speaker Change: activity that can be derived from the existing book versus new activity kind of given that leverage is Obviously kind of getting close to being maxed out, you know within the BDC
Speaker Change: is getting active again. You know, I think you were on the PSLT call earlier. It's an active environment for middle market M&A. We hope to be getting some realizations on our equity co-invest portfolio as part of that. Certainly we're going to get repayments.
Speaker Change: on loans as part of that and the idea is to, you know, optimize, optimize that portfolio.
Speaker Change: Manage it sensibly and tightly, but you know the wheels of commerce and the wheels of M&A are picking up again.
Speaker Change: Hopefully that will provide us an ability to get some equity realizations and make the equity piece of the book, a smaller piece of the book.
Speaker Change: Thanks for that. Would you say that any of your larger equity co-investments are getting any closer to that point of exit if we do see a material pickup in M&A activity next year?
Speaker Change: Sure, I mean you can, it's a simple review of the equity co-investment look at fair market value relative to cost.
Speaker Change: and if there's, if your market value is a lot higher than cost, typically we're a co-investor with a private equity sponsor.
Typically it's just a matter of time.
Speaker Change: We're hoping to get some nice realizations in the not-too-distant future.
Speaker Change: Appreciate it. Thank you very much Art, that's all for me.
Thank you.
Speaker Change: And our next question will come from Melissa Waddell with J.P. Morgan.
Speaker Change: Good afternoon. Thanks for taking my question. Most of mine has already been asked, but I thought I'd follow up on the JV in particular. As you talked, you mentioned that the growth in the portfolio is likely to come through that JV. It certainly makes sense with the recent upsize. When you think about the investment in the JV, both in the sub-debt but also the equity investment,
Availability
Speaker Change: For that particular bucket, let's just say average position should be 2%, so that's
Speaker Change: Up to $30 million, and I think reality, the average position there will be about $25 million if we were to do, you know, a new loan that JV would take, you know, $20 to $25 million.
Speaker Change: You know in and of itself so very diversified portfolio in the JV and then the question is is What's too big for PNNT in terms of its position in that JV? You know look we're getting pretty full Just be quite honest. We're getting pretty full
Speaker Change: Prior to this investment, PNNT owned 60% of the JV, our partner owned 40%. We did not take 60% of this upsize. We took less. They took more. So I think we're probably about 55%, 45% now. So, something we evaluate.
Speaker Change: That said, when you look at the underlying portfolio, the underlying portfolio obviously is very, very diversified.
Understood. Thanks, Art.
Mark Hughes, Paul Johnson, Brian McKenna, Paul Johnson
Speaker Change: And the next question will come from Casey Alexander with Compass Point.
Yeah, I've got a few. One in particular, JNF
Speaker Change: equity position that was marked up 9 million this quarter Off that was a pretty extreme mark to market quarter over quarter on an equity position is one of the few equity positions That really is large enough that if it if it got monetized it could it could really help your income producing your income generating in terms of switching it to stuff that does generate income
Speaker Change: Does that one in particular appear to have some sort of a path towards monetization because all of a sudden because usually when we see a Large quarter over quarter markup like that. It may mean that that that you know, something is more current
Speaker Change: Yeah you know that's that's you know we just said that hey when there's a big markup of the equity just a minute hopefully it's just a matter of time although we never want to over promise and under deliver and occasionally we've under delivered on that score Casey so do not want to over promise and under deliver but that that deal has been marked up and companies performing well.
Speaker Change: Secondly, and as you say, you're the 45% in the JV, right?
Speaker Change: in this last iteration, but overall, no, overall today we're about 55%.
Speaker Change: Oh, PNNT is 55%. Okay, yeah. It could be the first JV I've ever seen where the balance sheet is going to be larger than the...
on company balance sheet.
But let me ask, you know, the balance sheet...
Speaker Change: And so, that would make the effective leverage around 1.7 times.
Speaker Change: And when you bring that down, when you move those over to the JV, the appropriate investments to get it to where you want to be, and bring your leverage ratio back down to your target leverage ratio,
Speaker Change: I'm struggling a little to figure out how that is going to be accretive to earnings if, you know, 100% of the income is on balance sheet shifting to, you know, 50% of the income going off balance sheet.
is obviously accretive to NII.
Speaker Change: So that's very helpful, and we're earning some income along the way, but your question is like, hey, when the dust settles...
Speaker Change: You know once the JV is fully optimized at a billion and a half and
Speaker Change: The Sacramento Capitol putting in whatever those economics look like and we can we can work through that model with you Casey on the incremental capital putting in the JV and how that works its way back to PNNT and then yes, we are. You know, we are looking forward to some equity rotation, you know, in this.
Speaker Change: in this M&A world that seems to finally have revived after a couple years of being sleepy.
Speaker Change: And, you know, I think those are the two drivers for optimizing, you know, NII is the JV and the equity rotation.
Speaker Change: You know, it's hard to imagine that over 30% of your portfolio
Speaker Change: You know was getting bolt-on growth capital. It feels like there may be some maintenance capital That's that's helping these companies pay the coupon on their debt
Speaker Change: and PIC income is already 13% of the total portfolio. Can you talk to those 44 and, you know, how many of them are kind of maintenance capital versus ones that are really requiring additional bolt-on growth capital?
Speaker Change: I'll kick it over to Rick in a minute because some of this might just be revolver draws. So I don't know, Rick, how much of that's revolver. We do have a very active portfolio. Again, most of the deals we're doing, you're taking a 10 or 15 or 20 million dollar company and you're, there's a real game plan to grow it to 40, 50 and greater. So the DDTLs are an important
Rick Allorto: piece of the add-on loans we're making. Rick, are revolvers included in some of those numbers Casey was referring to? Yes, the 44 add-on does include revolver draws.
and I would guesstimate that that
probably about 85%.
Rick Allorto: It is related to revolver draws as opposed to add-on acquisitions and DDTL functions.
Okay, great. Thank you for taking my questions.
Thanks, Casey.
Speaker Change: And that does conclude the question and answer session. I now turn the conference back over to Mr. Art Penn.
Speaker Change: I just want to thank everybody for being on the call today and this season of Thanksgiving. I want to express gratefulness and thankfulness to you know everybody who's on the call and your interest in PNNT. Wishing everybody a terrific holiday season and we'll talk to you in February.
Speaker Change: Thank you. That does conclude today's conference. We do thank you for your participation. Have an excellent day.
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