Executive Summary

Q2 2025 net investment income (NII) was $25.0M and $0.28 per share; core NII was also $0.28. NAV per share fell 2.4% to $11.07 on unrealized depreciation, while the portfolio grew 7% sequentially to $2.34B .
Versus consensus: EPS of $0.28 missed the $0.320 mean; investment income of $61.9M missed the $65.8M mean. Prior quarter (Q1) beat EPS and revenue; the trend flipped to a miss this quarter as originations slowed post “Liberation Day” and spreads only recently started to rise * [GetEstimates: Q2 EPS/Revenue]* .
Liquidity and funding strengthened: pricing on the revolver cut to SOFR+200, a new $361M term ABS at 1.59% spread, and PSSL’s $301M CLO at a 1.71% spread; weighted average cost of debt improved to 6.8% (six months) .
Management expects NII to “comfortably cover the dividend” as two non-accruals returned to accrual and deployment ramps; pro forma non-accruals at cost drop to ~1% post-quarter .
Stock reaction catalysts: improved funding costs, expected spread tailwinds, and non-accrual resolutions vs. near-term headwind from unrealized depreciation/NAV decline and the Q2 EPS/revenue miss [GetEstimates: Q2 EPS/Revenue]*.

What Went Well and What Went Wrong

What Went Well

Funding stack upgraded: Revolver pricing reduced to SOFR+200 and extended; a new $361M securitization at 1.59% spread; PSSL closed a $301M CLO at ~SOFR+1.71%, bolstering platform liquidity and earnings leverage .
Defensive credit profile: 100% floating-rate debt, low PIK (3%), a conservatively structured portfolio (weighted average leverage 4.2x; interest coverage 2.3x), and meaningful covenant protections; non-accruals subsequently improved with two assets returning to accrual .
Management tone on dividend coverage: “We believe [NII] will comfortably cover the dividend” as deployment resumes; core NII would have been $0.30 per share adjusting for ATM timing and non-accruals add ~$0.01/share run-rate .

What Went Wrong

EPS and revenue miss: Q2 EPS of $0.28 missed $0.320 consensus; investment income of $61.9M missed $65.8M consensus, reflecting slower originations post “Liberation Day” and unrealized depreciation pressure * [GetEstimates: Q2 EPS/Revenue]* .
NAV decline: NAV/share decreased 2.4% to $11.07, driven by $(20.8)M net unrealized depreciation in Q2 and $(49.7)M for the six months; net assets from operations were nearly flat at $0.01/share .
Higher expenses: Interest and debt expenses rose to $22.5M; base/incentive fees increased with portfolio scale; overall Q2 expenses at $36.9M vs. $25.3M YoY, compressing NII margin vs. Q1 .

Financial Results

Core P&L vs Prior Periods and Estimates

Metric	Q4 2024	Q1 2025	Q2 2025	Q2 2025 Consensus
Investment Income ($USD Millions)	$55.5	$67.0	$61.9	$65.81* (5 ests)*
Net Investment Income ($USD Millions)	$18.0	$30.0	$25.0	—
NII per Share ($USD)	$0.24	$0.37	$0.28	$0.320* (7 ests)*
Core NII per Share ($USD)	$0.32	$0.33	$0.28	—
NII Margin % (NII/Investment Income)	32.4%	44.7%	40.4%	—
NAV per Share ($USD)	$11.31	$11.34	$11.07	—

Notes: Consensus values retrieved from S&P Global*.
NII Margin % is computed from reported investment income and NII; citations refer to source figures.

Portfolio and Asset Mix

Metric	Q4 2024	Q1 2025	Q2 2025
Portfolio Fair Value ($USD Millions)	$1,983.5	$2,193.9	$2,344.1
Companies (#)	158	159	159
Weighted Avg Yield on Debt	11.5%	10.6%	10.5%
Non-Accruals (% cost / % FV)	0.4% / 0.2%	0.4% / 0.1%	2.2% / 1.2%
PIK as % Interest Income	—	—	3%
Asset Mix (Q2)	—	—	90% 1st lien; <1% sub debt; 3% PSSL equity; 7% other equity

Capital and Liquidity

Metric	Q4 2024	Q1 2025	Q2 2025
Cash & Equivalents ($USD Millions)	$112.1	$102.3	$111.4
Revolver Unused Capacity ($USD Millions)	$192.1	$127.1	$462.1
Regulatory Debt-to-Equity (x)	1.35x	1.40x	1.29x
Debt-to-Equity (CFO, Q2) (x)	—	—	1.3x
Weighted Avg Cost of Debt (annualized)	8.5% (FY)	7.0% (Q1)	6.8% (6M)

Distributions

Metric	Q4 2024	Q1 2025	Q2 2025
Distributions Declared per Share	$0.31	$0.3075	$0.3075
Monthly Distribution (Press Release)	—	—	$0.1025 (May, Jun)

Guidance Changes

No formal quantitative revenue/EPS guidance was issued. Management reiterated expectation to “comfortably cover the dividend” as deployment resumes and non-accruals normalize .

Metric	Period	Previous Guidance	Current Guidance	Change
Monthly Dividend per Share	May–June 2025	$0.1025	$0.1025	Maintained
Revolver Pricing	April 2025	SOFR + 225 bps	SOFR + 200 bps	Lowered
ABS Securitization Spread	Feb/Mar 2025	Prior ABS ~+1.89% (refinanced)	+1.59% (new $361M)	Lowered
Weighted Avg Cost of Debt	6 months ended Mar 31, 2025	7.1% (6M prior year)	6.8%	Lowered

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024 and Q1 2025)	Current Period (Q2 2025)	Trend
Originations Mix & Pipeline	Active in core middle market; growing PSSL JV capacity	~80% originations from existing borrowers; pipeline slowed post “Liberation Day” but stabilizing	Near-term slower, expected to normalize
Pricing/Spreads	First-lien pricing stable; ABS spread improvement planned	Repricings ended; spreads up 25–50 bps vs. pre-Liberation Day	Improving
Tariffs/Macro	Portfolio skewed to sectors less tariff-sensitive	Limited tariff exposure; uncertainty slowed M&A; activity stabilizing	Stabilizing
Non-Accruals/Asset Quality	Low non-accruals; strong covenants	4 non-accruals at Q2; 2 returned post-quarter; pro forma ~1% cost / 0.5% FV	Improving post-quarter
JV (PSSL) Scale	Committed expansion to ~$1.5B capacity	$301M CLO; $350M committed growth; mid-teens ROE potential	Expanding
Dividend Coverage	Solid NII; declared monthly distributions consistently	Mgmt expects comfortable coverage as ramp continues; core NII adj to $0.30	Positive tone

Management Commentary

“We significantly increased our financial strength…lower cost credit facility, new low cost long term securitization…positioned to take advantage of the upcoming attractive vintage of new loans.” — Art Penn, Chairman & CEO .
“Our portfolio … one of the most conservatively structured … weighted average leverage 4.2x … interest coverage 2.3x … virtually all originated first lien loans have meaningful covenants.” — Art Penn .
“GAAP NII was $0.28 per share…NAV was $11.07 per share, down 2.4%…PIK income only 3%.” — Rick Allorto, CFO .
“We believe we can comfortably cover the dividend as we ramp into this vintage…and two non-accruals returned to accrual post-quarter.” — Art Penn .

Q&A Highlights

Equity raise motivation and deployment: Built a “war chest” via ATM at prices above NAV to fund robust 2025; activity slowed after “Liberation Day,” but stabilization is emerging .
Tariff/M&A unlocking: Limited portfolio tariff exposure; broader uncertainty slowed deals; expects improvement with more certainty; spreads rising post-Liberation Day .
Non-accrual restructurings: Run-rate recapture ~60% of lost income, ~$0.01/share; combined with ATM adjustment, core NII points to dividend coverage .
JV growth optionality: PSSL can scale to ~$1.5B; potential to add another JV partner over time to enhance ROE .

Estimates Context

Q2 2025 EPS of $0.28 vs. consensus $0.320 → miss; investment income $61.9M vs. $65.8M → miss. Q1 2025 beat both EPS ($0.37 vs. $0.322) and revenue ($67.0M vs. $59.5M) * * [GetEstimates: Q1–Q2 EPS/Revenue]*.
Drivers for potential estimate revisions: higher spreads (+25–50 bps), reduced revolver pricing, and non-accruals returning to accrual could support NII and dividend coverage; unrealized depreciation/NAV volatility remains a watch item .

Note: Consensus values and counts retrieved from S&P Global*.

Key Takeaways for Investors

Near-term: Q2 miss and NAV dip reflect slower originations and unrealized marks; however, funding costs fell and spreads are improving, setting up a cleaner Q3/Q4 earnings runway * .
Dividend support: Management’s pro forma view (ATM timing and non-accrual resolutions) indicates NII comfortably covers the monthly $0.1025 dividend; monitor deployment pace and non-accrual trends .
Credit quality: Low PIK, strong covenants, and conservative leverage/coverage metrics underpin resilience amid macro uncertainty .
Growth levers: $500M+ available capital at PFLT and ~$350M at PSSL plus securitizations provide ample capacity to scale earnings as M&A normalizes .
Watchlist: Unrealized depreciation and NAV volatility; expense trajectory with larger balance sheet; timing of originations resumption in the core middle market .
Tactical: The spread uptick and lower liability costs are positive margin drivers; look for sequential improvement in NII as deployment ramps and pro forma accruals flow through .

—

References:

Q2 2025 8-K press release and exhibits ; Company press release (same content) -.
Q2 2025 earnings call transcripts - - -.
Q1 2025 8-K press release -; Q4 2024 8-K press release -.
Credit facility amendment press release (Apr 22, 2025) -.
Monthly distribution releases (May 2, 2025; Jun 3, 2025) - -.
Consensus estimates via S&P Global (EPS/Revenue/targets) [GetEstimates: Q1–Q3 2025]*.

PennantPark Floating Rate Capital Ltd. (PFLT)·Q2 2025 Earnings Summary