PennantPark Investment: Preview Of IVQ 2025 Results

Below Expectations

NEWS

From Seeking Alpha:

PennantPark Investment (PNNT) estimated its core net investment income for the fiscal first quarter ended December 31, 2025, between $0.13 and $0.15 per share, vs. $0.15 in the prior quarter.

Net investment income is estimated to be between $0.10 and $0.12 per share, compared to $0.15 per share in the prior quarter.

Net asset value per share is estimated to be between $6.97 and $7.02 per share at December 31, 2025, compared to $7.11 at September 30, 2025.

For the full 8-K disclosure, click here.

Unusually, PNNT has chosen to publish in an 8-K filing, and not by press release, a preview of key metrics related to its IVQ 2025 performance. Why a preview was deemed necessary is not clear, but it may be due to regulatory requirements. In any case, we’ll review what we have learned, compare against the performance in the prior quarter and , where appropriate, with analyst expectations.AGENDA

A Brief Reminder

Just a few weeks ago, PNNT announced the following on December 15, 2025:

PennantPark Investment Corporation (NYSE: PNNT) (the “Company”) announced that it has sold its equity investment in JF Intermediate, LLC (“JF”) for $67.5 million, resulting in a realized gain of $63.1 million. This amount approximates the fair value of the investment as of September 30, 2025. JF represented 23% of the equity investment portfolio of the Company at fair value on that date, excluding its equity investment in PennantPark Senior Loan Fund LLC. The Company also announced that it increased the size of its multi-currency, senior secured credit facility (the “Credit Facility”) from $500 million to $535 million, extended the maturity to 2030, and reduced pricing from SOFR plus 235 bps to SOFR plus 210 bps.PNNT Press Release 12-15-2025

See our article from December 15, 2025, where we discussed the impact of these developments.

Latest Earnings

In the IIIQ 2025, both Core Net Investment Income (CNIIPS) and GAAP-approved Net Investment Income Per Share (NIIPS) amounted to $0.15.

To put into context, that was the lowest level in the past 12 quarters, down from a high of $0.26, a (42%) decrease.

The 8 analysts that cover the stock have been projecting recurring earnings per share of $0.17 for the IVQ 2025..

We believe the analysts use the GAAP measure rather than the non-GAAP CNIIPS, but we’re not certain.

In either case, earnings have come in a little shy of expectations.

Using the midpoint of the NIIPS estimate range and adding back the one-time cost from the credit facility extension suggests the “real” recurring earnings might be $0.14, but there could be other unusual items, both in income and expenses, not discussed in the filing.

Net Asset Value Per Share

PNNT’s NAVPS has dropped an above-average (6.0%) in the last 12 months and tacked together 3 losing quarters in a row through last September.

That losing streak is about to continue. If NAVPS ends up at $7.00 a share, the quarter-over-quarter percentage loss will be (1.5%).

However, as the 8-K filing points out, within the NAVPS calculation, there are both debits and credits:

The decrease in net asset value per share is estimated to be attributable to distributions in excess of net
investment income, which included a one-time non-recurring net expense of $0.03 per common share related to the Company’s Credit Facility amendment… The performance of the overall portfolio is estimated to result in a gain of $0.02 to $0.04 per common share.

Non Accruals

However, the latest non-accrual information suggests that the metric has gotten worse:

As of December 31, 2025, there were four loans on non-accrual representing 2.2% of the portfolio at cost and 1.1% at fair market value versus four loans on non-accrual at September 30, 2025 representing 1.3% of the portfolio at cost and 0.1% at fair market value.

We don’t know whether the 4 loans reported as non-performing are the same as last quarter. We suspect not. One non-accrual may have been removed due to restructuring or write-off, and a new company added.

Leverage

At the end of September 2025, PNNT’s leverage was 1.60x – on the high side for any BDC and well above the BDC’s own “target” of 1.25-1.30x.

Now we learn that the year-end 2025 leverage has dropped to 1.34x – technically slightly above the target.

This was anticipated by the BDC on its last conference call. The plan – likely to have been accomplished – was to sell certain on-balance-sheet assets to one of its joint ventures.

Unsecured Notes Maturing

PNNT has managed to reduce the borrowing costs on its Revolver, but the latest 8-K reminds us that two unsecured notes are coming due in May and November of this year.

These have much lower yields than the BDC is likely to be able to refinance them for.

We estimate – very roughly – that PNNT will need to pay an incremental 3% on $315mn, which eventually annalizes as the debt gets replaced, at a higher interest bill of over ($9mn) a year.

Before any impact on incentive fees or any other factors that could lower earnings by about ($0.14) a share.

Liquidity

The BDC’s availability under its Revolver has increased drastically – probably due to the realized gain and the de-leveraging.

At the end of the IIIQ 2025, cash and Revolver availability were $52mn and $74mn, respectively.

Currently, the amounts are $46mn and $239mn. That’s an increase in available funds of $159mn.

VIEWS

Not All There

As always, these early peeks into a BDC’s financial performance leave us wanting more metrics to complete the picture, such as total realized and unrealized gains.

Still, there’s more data here than in most.

Okay At Best

The picture painted is mixed. Leverage has been “fixed,” and liquidity is abundant, but earnings, NAVPS, and non-accruals are all a little weaker.

Furthermore, unless PNNT continues to convert equity assets into interest-bearing investments, the pressure on earnings is likely to persist.

We’ve discussed the possibility of higher borrowing costs, but there is also the impact of thinner spreads and – of course – lower interest rates.

(Not) Looking Forward

The analyst consensus for FY 2026, which ends in September of this year, is that recurring earnings per share will fall to $0.65 from $0.71 in the just-ended FY 2025.

Based on the evidence at hand – and we may be proved wrong when the full quarterly results are released – that earnings projection may prove to be materially optimistic, even if PNNT’s credit performance remains relatively stable.

In FY 2025, the BDC’s return on equity was 10%. By the end of this fiscal year, that could drop to 8% or lower.