NexPoint Capital, Inc. (NXPT)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered positive net investment income (NII) of $0.03 per share on $0.65M of total investment income, but a net loss of $1.07M (−$0.12 EPS) driven by $1.37M of unrealized depreciation, primarily tied to the REIT subsidiary’s holding in NexPoint Real Estate Finance (NREF) .
• NAV per share declined to $4.99 (GAAP) from $5.21 at 12/31/24; the Board maintained the quarterly cash distribution at $0.09/share. The Adviser set the DRP issue price at $5.07 as of 3/31/25, modestly above the GAAP NAV .
• Portfolio mix remained equity-heavy (Common 37%, Preferred 26.3%) with high Level 3 exposure (84.6% of net assets). Estimated gross annual portfolio yield improved sharply to 7.3% from 2.20% at 9/30/24, while non‑accruals were 7.3% of fixed income by fair value .
• The company completed its Q1 tender offer, repurchasing ~149,885 shares (≈1.71% of shares), and kept its quarterly tender capacity at up to 2.5% of outstanding shares; distribution policy unchanged at $0.09/share .

What Went Well and What Went Wrong

What Went Well

• NII turned positive year over year: NII improved to $0.29M ($0.03/share) vs $(0.08)M (−$0.01/share) in Q1 2024, aided by higher dividend/interest income and expense controls under the expense limitation .
• Portfolio yield momentum: Estimated gross annual portfolio yield increased to 7.3% (amortized cost basis) from 2.20% at 9/30/24, signaling improved income‑generating profile heading into 2025 .
• Policy continuity supports investor liquidity/income: The Board maintained the $0.09 quarterly distribution and continued quarterly tender offers (up to 2.5% of shares), with 149,884.92 shares tendered in Q1 .

Management soundbite: “Our investment objective is to generate high current income and long-term capital appreciation.”
“We generate a significant portion of our total revenue in the form of interest on the debt securities that we hold.”

What Went Wrong

• Mark-to-market headwinds: Unrealized depreciation of $(1.37)M drove a net loss (−$0.12 EPS), primarily due to declines at NexPoint Capital REIT, LLC (whose primary holding is NREF common) .
• NAV pressure: GAAP NAV/share fell to $4.99 from $5.21 at 12/31/24; the Adviser-determined DRP price was $5.07 as of 3/31/25, above GAAP NAV and highlighting valuation-method differences (Rule 2a‑5 vs. GAAP consolidation) .
• Persistent valuation and credit risk: Level 3 assets comprised 84.6% of net assets; fixed income non‑accruals remained elevated at 7.3% of fixed income, and the weighted average credit rating stayed weak (Ca) .

Financial Results

Income statement and per-share metrics

Notes: Q4 2024 stand-alone P&L was not reported in a 10‑Q; the company reports FY in a 10‑K and Q1/3 in 10‑Qs. Estimate comparisons unavailable (see Estimates Context).

Balance sheet and NAV

Portfolio breakdown (by investment type, fair value)

Portfolio breakdown (by industry, fair value)

KPIs and portfolio quality

Guidance Changes

Earnings Call Themes & Trends

No earnings call transcript was filed for Q1 2025. Themes below are synthesized from the 10‑Q/8‑Ks.

Management Commentary

• Strategy: “Our investment objective is to generate high current income and long-term capital appreciation.”
• Revenue drivers: “We generate a significant portion of our total revenue in the form of interest on the debt securities that we hold.”
• Expense discipline: The Expense Limitation Agreement continues through at least April 30, 2026, with recoupment mechanics and caps on “Other Expenses” .
• Valuation oversight: Adviser designated as valuation designee under Rule 2a‑5; fair value process involves valuation committee and periodic third‑party reviews .

Q&A Highlights

• No Q1 2025 earnings call transcript was filed; no Q&A to report [ListDocuments showed none in period].

Estimates Context

• S&P Global consensus for EPS, revenue, EBITDA, target price and recommendation was unavailable for NXPT (non‑traded BDC; missing CIQ mapping). We attempted to retrieve consensus but no data was returned. Given the lack of coverage, there are no estimate comparisons this quarter.

Key Takeaways for Investors

• Income improved but NAV fell: Positive NII ($0.03/share) contrasted with a net loss and NAV decline driven by unrealized REIT‑related depreciation—emphasizing the portfolio’s mark‑to‑market sensitivity .
• Yield inflection: The sharp rise in estimated portfolio yield (7.3%) suggests improved run‑rate income potential if credit performance holds and non‑accruals remain contained .
• Valuation risk remains elevated: With 84.6% of net assets in Level 3, quarter‑to‑quarter NAV volatility is likely; close monitoring of NREF/REIT and telecom holdings (MidWave) is warranted .
• Liquidity program intact: The maintained $0.09 dividend and recurring 2.5% quarterly tender offers continue to provide income and partial liquidity in a non‑traded structure .
• Watch affiliated holdings and healthcare concentration: Affiliated investments are ~21% of net assets; healthcare now ~36% of FV—a source of potential alpha but also sector concentration risk .
• Near‑term catalysts: Subsequent NAV determinations/DRP pricing, tender outcomes, and marks on key positions (NREF, MidWave, Sapience/Apnimed) will likely drive NAV directionality quarter to quarter .

Appendix: Additional Operational/Distribution Items

• Distribution: $0.09/share declared; paid 4/21/25 to holders of record 3/31/25 .
• DRP price/NAV determinations: $5.21 (1/31/25), $5.22 (2/28/25), $5.21 (3/24/25), $5.07 (3/31/25) .
• Tender offer: Final Q1 2025 results announced 3/28/25; 149,884.92 shares tendered (≈1.71% of shares) .

All figures are sourced from company filings as cited.