Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

PennantPark Investment Corporation (NASDAQ:PNNT)

Q3 2014 Results Earnings Conference Call

August 6, 2014 10:00 AM ET

Executives

Art Penn - Chairman and CEO

Aviv Efrat - Chief Financial Officer

Analysts

Doug Mewhirter - SunTrust

Greg Mason - KBW

Chris York - JMP Securities

Mickey Schleien - Ladenburg

Scott Valentin - FBR & Company

Greg Nelson - Wells Fargo Securities

Operator

Please stand by, we're about to begin. Good morning. And welcome to the PennantPark Investment Corporation's Third Fiscal Quarter 2014 Earnings Conference Call. Today's conference is being recorded. At this time, all participants have been placed in a listen-only mode. The call will be open for a question-and-answer session following the speakers' remarks. (Operator Instructions)

It is now my pleasure to turn the call over to Mr. Art Penn, Chairman and Chief Executive Officer of PennantPark Investment Corporation. Mr. Penn, you may begin your conference.

Art Penn

Thank you, and good morning, everyone. I'd like to welcome you to PennantPark Investment Corporation's third fiscal quarter 2014 earnings conference call. I'm joined today by Aviv Efrat, our Chief Financial Officer.

Aviv, please start-off by disclosing some general conference call information and included discussion about forward-looking statements.

Aviv Efrat

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 PennantPark Investment Corporation and that any unauthorized broadcast of this call in any form is strictly prohibited. Audio replay of the call will be available by using the telephone numbers and PIN provided in our earnings press release.

I'd also like to call your attention to the customary Safe Harbor disclosure in our press release regarding forward-looking information. Today's conference call may also include forward statements and projections, and we ask that you refer to our most recent filing with the SEC for important factors that could cause actual results to differ materially from these projections.

We do not undertake to update our forward-looking statements unless required by law. To obtain copies of our latest SEC filings, please visit our website at www.pennantpark.com or call us at (212) 905-1000.

At this time, I’d like to turn the call back to our Chairman and Chief Executive Officer, Art Penn.

Art Penn

Thank you, Aviv. I’m going to spend a few minutes discussing current market conditions, followed by a discussion of investment activity, the portfolio, the financials, our overall strategy and then open it up for Q&A. As you all know, the economic signals are moderately positive with many economists expecting a slowly growing economy going forward.

With regard to the more liquid capital markets and in particular the leveraged loan and high-yield markets, during the quarter ended June 30th, those markets generally remained strong due to substantial cash flows into high-yield funds, leveraged loan funds and CLOs.

Since quarter end, there has been cash outflow from high-yield and leverage loan funds, resulting in a less robust broadly syndicated and liquid high-yield market, which helps the overall turn in the middle-market.

Risk reward in the middle-market has generally remained attractive as the overall supply of middle-market companies who need financing exceeds the relative demand of applicable lending capacity.

As debt investors and lenders, a slow growth economy is fine as long as we’ve underwritten capital structures prudently. A healthy current coupon with deleveraging from free cash flow overtime is a favorable outcome.

We’ve continued to be selective about which investments we make in this environment. Given our strong origination network and the size of our company, we believe we can continue to prudently grow.

We remain focused on long-term value and making investments that will perform well over several years and can withstand different economic cycles. We continue to set a high bar in terms of our investment parameters, and remain cautious and selective about which investments we add to our portfolio.

Our focus continues to be on companies and structures that are more defensive, have low leverage, strong covenants and high returns, with plenty of dry powder we are well-positioned to take advantage of the investment opportunities as they arrive.

As credit investors one of our primary goals is preservation of capital. If we preserve capital usually the upside takes care of itself. As in business one of our primary goals is building long-term trust. Our focus is on building long-term trust with our portfolio companies, management teams, financial sponsors, intermediaries, our credit providers and of course, our shareholders.

We are first call for middle-market financial sponsor management teams and intermediaries who want consistent credible capital. As an independent provider free of conflicts or affiliations we’ve become trusted financing partners for our clients. Since inception PennantPark entities have finance companies back by 140 different financial sponsors.

We have been active and are well-positioned. For the quarter ended June 30, 2014, we invested $192 million. The average yields on new debt instruments was 11.7%, expected IRR’s generally range from 13% to 18%.

Net asset value per share increased 1.8% for the quarter and has increased 8% over the last three quarters. Core net investment income was $0.28 per share. We are pleased that we increased our credit facility by $100 million to $545 million, reduced the rate to LIBOR + 225 from LIBOR + 275 and extended the maturity to five years.

We have met our goal of a steady, stable and consistent dividend stream since our IPO over seven years ago, despite the overall economic and market turmoil throughout that time period. We are one of the only BDCs to no cut its dividend during this time period.

We anticipate continuing this steady, stable dividend stream going forward. Given the current market backdrop, we’ve remained appropriately levered, have plenty of excess liquidity that can be use for both defensive and offensive purposes. At quarter end, our overall net leverage ratio accounting for cash on the balance sheet was approximately 55% and was only about 35% excluding SBIC debt.

As a result of our focus on high-quality new investments, solid performance of existing investments and continuing diversification, our portfolio is constructed to withstand market and economic volatility.

The cash interest coverage ratio, the amount by which EBITDA or cash flow exceeds cash interest expense continued to be a healthy 2.7 times. This provides significant cushion to support stable investment income. Additionally, at cost, the ratio of debt-to-EBITDA on the overall portfolio was 4.6 times, another indication of prudent risk.

We have plenty of liquidity. As of June 30th, we had in total over $420 million of available liquidity, consisting of $290 million of available credit facility, $75 million of new SBIC debt financing in our second SBIC and over $60 million of cash on hand.

As a reminder, we have exemptive relief from the SEC to exclude SBIC debt from our asset coverage ratios and SBIC accounting is cost accounting not mark-to-market accounting. These facts highlight how the SBIC debt reduces overall risk of the company.

We had some attractive realizations last quarter. For example, LTI Flexible refinanced our $30 million subordinated debt position, which generated a 16.8% IRR. We’ve remained an equity co-investor and received a dividend as part of that financing.

Learning Care Group is sold and our $8 million subordinated debt and warrant position was taken out of 22% IRR. Our $38 million subordinated debt position in (indiscernible) was exited and our IRR of 26.3% on the company was sold.

Our overall NAV was up again 1.8% this quarter and a key driver of that upside was due to the realization of our investment in UP, Universal Pegasus. UP was sold to a strategic buyer early in the quarter.

As many of you know, UP have 1 point was non-accrual that resulted in us converting some debt-to-equity in restructuring and investing additional equity to provide liquidity to the company.

We ended up only about 28% of the equity and taking an active position on the Board. As a result of this sale, the IRR from inception of investment to exit was 12%, not bad for the restructuring.

Despite the recession across PennantPark entities, we’ve had only seven non-accruals out of 334 investments since inception over seven years ago. We currently have no non-accruals on our books.

Further, we are proud that even when we have those seven non-accruals, we’ve been able to preserve capital for our shareholders, through hard work, patience and judicious additional investments in those companies. We’ve been able to find ways to add value. Based on values as of June 30th, we’ve recovered 92% of capital invested so far on those seven companies.

As a result of this track record of low non-accruals and high recovery rate, we are one of the few BDCs who was in operation before the recession who has preserved capital for shareholders while generating a consistent steady dividend.

In terms of new investments, we had another quarter of investing an attractive risk adjusted returns. Our activity was primarily driven by growth financings, re-financings and acquisition financings, and virtually all of these investments. We’ve known these particular companies for awhile, has studied the industries or have a strong relationship with this sponsor.

Let’s walk through some of the highlights. We invested $22 million in second-lien debt of Bennu Oil & Gas. Bennu is an exploration and production company focused in the deepwater and shales of the Gulf of Mexico.

Foundation Building Materials is a distributor of drywall and other building products. We purchased an add-on of $45 million of the second-lien term-loan. CI Capital is the sponsor.

We purchased $12 million of the first-lien debt in Fox US Bidco, Robertshaw. Robertshaw is a manufacture of control system components for white good appliances. Sun Capital is the sponsor.

New Gulf Resources is an exploration and production company focused on oil and gas assets in the Eastern Texas. We’ve purchases $45 million of second-lien debt and $13.5 million of subordinated debt and warrants in the company.

We invested $40 million in the first-lien term-loan of U.S. Wells Services. U.S. Wells is a provider of pressure pumping services primarily in the Marcellus Shale Basin. Orbit Investment is the majority shareholder.

Turning to the outlook, we believe that 2014 will continue to be active due to growth and M&A driven financings. Due to our strong sourcing network and client relationships, we are seeing active deal flow.

Let me now turn the call over to Aviv, our CFO, to take us through the financial results.

Aviv Efrat

Thank you, Art. For the quarter ended June 30, 2014, recurring net investment income totaled $0.26 per share. In addition, we had $0.02 per share of other income. As a result, core net investment income for the quarter was $0.28 per share.

Additionally, we had $0.06 per share of upfront expenses due to the new credit facility and $0.02 a share of capital gain incentive fee that are accrued but not payable. As a result, GAAP net investment income was $0.20 per share.

Looking at some of the expense categories, management fees totaled $12 million, including $2 million of incentive fees accrued but not payable. General and administrative expenses totaled $1.9 million and interest expense totaled $5 million.

During the quarter ended June 30th, net realized gain from investment was $23 million or $0.35 per share. Unrealized loss from investments was $1 million or $0.02 per share and unrealized loss from our notes was $3 million or $0.05 per share. Excess net dividend over income was about $5.4 million or $0.08 per share. Consequently, NAV per share went up $0.20 from $11.13 to $11.33 per share.

As a reminder, our entire portfolio, credit facility and senior notes are mark-to-market by our Board of Directors each quarter using the exit price provided by independent valuation firms, securities exchanges or independent broker/dealer quotations when active markets are available under ASC 820 and ASC 825. In cases where broker/dealer quotes are inactive, we use independent valuation firms to value the investments.

Our overall debt portfolio has a weighted average yield of 12.3%. On June 30th, our portfolio consisted of 66 companies across 28 different industries and was invested 26% in senior secured debt, 40% in second-lien secured debt, 24% in subordinated debt and 10% in preferred and common equity. 61% of the portfolio has a floating rate including 53% with the floor and the average LIBOR floor is 1.3%.

Now, let me turn the call back to Art.

Art Penn

Thanks, Aviv. To conclude, we want to reiterate our mission. Our goal is a steady, stable and consistent dividend stream, coupled with the preservation of capital. Everything we do is aligned to that goal.

We try to find less risky middle-market companies that have high free cash flow conversions. We capture that free cash flow primarily in debt instruments and we payout those contractual cash flows in the form of dividends to our shareholders.

In closing, I’d like to thank our extremely talented team of professionals for their commitment and dedication. Thank you all for your time today and for your continued investment and confidence in us.

That concludes our remarks. At this time, I would like to open up the call to questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) We will go first to Doug Mewhirter of SunTrust.

Doug Mewhirter - SunTrust

Hi. Good morning. And just talk a little bit about the industry activity and expected portfolio activity, you had indicated that the pipeline seems pretty robust in July, August maybe September, and that’s actually been repeated by a lot of your competitors? But would you also say that maybe you would expect a maybe above trend activity on exits because there also maybe seen to be a lot of companies who are maybe want to refinance while the rates are still low or maybe because M&A activities just generating a lot of churn in your portfolio. Could you just comment on the balance between originations and exits in couple months?

Art Penn

Doug, thank you. That’s a great question. Hard to say and it’s been made harder to answer that question given the activity in the last couple weeks with regard to the liquid markets and back up in the liquid markets the liquid high yield market, broadly syndicated loan market.

As you know, the middle-market takes its tone from that to some extend even though we believe we are shielded from that. So if the liquid markets continued to experience choppiness, we would anticipate that the refinancings would abate substantially.

Hard to say, exactly, what's going to happen, we are only couple weeks into this at this point. So you might have the -- you might have the scenario where activity is pretty high, M&A levels are pretty high and the refinancings are not as high. So that might be a scenario but it is hard to say, it’s early.

Doug Mewhirter - SunTrust

Okay. Thanks for that. And just to finish a related follow-up question. Are there any large transactions either originations or exits this quarter to-date that you're willing to disclose?

Art Penn

We don’t, thank you. We don’t disclose intra-quarter information. So regarding the tone that we have been giving which is we are active is the tone. We are giving, it’s hard to say, we are in August 6th, quarter ends September 30th, a lot of time between now and then.

M&A activity has picked up. We don’t know how much if it’s going to close between now and 9/30 or year-end. Most of its get done in our last quarter of the calendar year and frankly, to the extent, these M&A deals are financed with very high leverage levels and low yields and lesser covenant impact.

We will not be involved in some of those. To the extent they get financed with we think our rational leverage levels, good covenant packages and good yields. We would be happy and will be involved in some of those.

So, again, given the markets, what’s going on the liquid markets, the M&A activity and a lot of it usually being back-ended to the last calendar quarter of the year. It’s really hard to give you much guidance at this point.

Doug Mewhirter - SunTrust

Great, thanks. That’s all my questions.

Operator

And next we will go to Greg Mason of KBW.

Art Penn

Greg, good morning

Greg Mason - KBW

Good morning, gentlemen. As I look at some of the new investments that you’ve made, U.S. Well, the New Gulf, all those related to oil and gas. It seems like heightened exposure there this quarter. Anything particular you're seeing in the energy markets or is that just happened to be lumpy in the quarter?

Art Penn

It’s a great question. It is -- as you know, oil and gas and energy are big teams in the American economy today. This is one sector that’s growing and those have a lot of capital needs. So that’s a big positive. We have exceeded deals like Barrow and UP which also were energy related. So, on an overall portfolio standpoint, our overall exposure is kind of consistent with what it’s been.

We had a very nice track record in energy over the last seven years. I think we invested something like $450 million in energy deals since inception to-date and has like a 14, 15% IRR. So it’s a space that we know well. We have had decent performance and it will continue to be a reasonably larger industry concentration for us.

Greg Mason - KBW

Great. And just on the equity in the portfolio obviously that is source of real earnings drivers to the extent you can exit those. And you exited that UP this quarter, is there anything kind of on the horizon that you are seeing a potential exits from any of the meaningful equity positions?

Art Penn

Again that’s -- that’s also wrapped up into kind of the first question which is how much M&A is there going to be, how much exit first entries are there going to be. I mean there are some of those deals you can look at for the co-investor portfolio where you’re seeing fairly nice mark-ups. Those would be the ones obviously whether there is potentially some activity, for instance, LTI or LTI Boyd, you saw a mark up.

We did get a dividend on that last quarter. We got it refinanced out of our mezz and we got a dividend. And that is one that continues to perform well. That’s just one example of some of the increases that we’ve seen in equity value. Vestcom is another one that had a nice quarter. Hard to say, hard to predict hard to guarantee any of this but where you’ve the seen the marks up would be where you’d either see some kind of recap opportunity or some kind of exit.

Greg Mason - KBW

Great. Then one last question on the SBIC, you’ve been at $150 million drawn for quite a while. You’ve got the second license but haven’t utilized it, just thought process on utilizing the remaining $75 million of debentures in your SBIC program?

Art Penn

It’s -- we'd loved to use it. It would be the first capital that we love to use to the extent we can find deals that fit the SBI -- SBIC, SBA criteria. SBA doesn’t like oil and gas. As a general proposition, it doesn’t really fit. So we’re working hard to find deals that fit that to meet our rigorous risk adjusted return portfolio guidelines to the extent we do regular rate financings for non-oil and gas deals. We’re going to work hard to see if those do fit.

Greg Mason - KBW

Is it just you’re not seeing the small deals or the small deals you’re seeing, you just don’t like the underwriting prospects of those small deals?

Art Penn

It’s more of the latter. We don’t have a problem with seeing deal flow. Thankfully, we see a lot of deal flow around here. It’s just a question of us meeting our risk adjusted return criteria. We’re happy we have a 4.6 times to average debt-to-EBITDA on the portfolio of PNNT. We get allergic once you get to the mid fives and up generally about some of these credits. Not to say that small companies are necessary levered that high but -- and we’re being awfully cautious in this environment making sure that we preserve shareholder capital and we’re not going to force investment that don’t feel right to us.

Greg Mason - KBW

Great. Thanks Art. Appreciate it.

Art Penn

Thank you.

Operator

Next we’ll now move to Chris York of JMP Securities.

Chris York - JMP Securities

Good morning guys. Thanks for taking my questions. Greg asked two of mine, but wanted to ask one additional question. Could you give us an update on your view of the investment opportunities in Europe? How you plan to manage international investment allocations within the investment portfolio?

Art Penn

Thanks Chris. Yes, we did do some European deals last quarter. We did not do any European deals this quarter. To us, Europe is like the U.S., it's a deal-by-deal business. We think the term-loan in the banking sector over there does help alternative lenders such as ourselves.

We have senior -- a senior colleague on the ground in London, who we’ve worked with for a long-long time as our feet on the ground at this point. Perhaps we grow our presence overtime. But it's going to be a very methodical thought for deal-by-deal approach like we do it here in the United States.

We do to hedge our currency risk. We do use our multi currency credit facility to draw on any European deal. So we have a -- we have a British Pound deal, Sterling deal in the portfolio. We finance that with our multi-currency credit facility and financed accounts.

Chris York - JMP Securities

So you talked a little bit about boots on the ground there. Could you help me to understand the deal flow internationally? How does PennantPark source its international deals. And maybe give me an idea for the flavor of the borrowers in Europe that are seeking alternative lenders?

Art Penn

We sourced the same way we source here. It's based on our reputation, relationship, knowledge and trust. It's not a -- it's not a footprint where we have storage in the retail malls. It's a more of whole strategy one-on-one relationship, deal-by-deal approach. There’s all sorts of borrowers who need capital over there similar to the borrowers who need capital over here. They are not finding their banks helpful or constructive.

Their banks are shrinking. In this particular case, the one of the two deals we did last quarter, it was bank who is downsizing their own book due to the regulatory issues. And they needed a solution and we were part of the solutions to provide capital to that company. They are very similar -- very similar characteristics to what's going on around here.

Chris York - JMP Securities

Great thanks for that color, Art. That’s it for me.

Art Penn

Thanks Chris.

Operator

And next we have Mickey Schleien of Ladenburg.

Mickey Schleien - Ladenburg

Good morning Art and Aviv. I just wanted to get your sense of whether you’re willing to run the company at somewhat higher leverage given that we’ve generally seen positive trends and the numbers. I do agree that it’s little choppy but the direction in terms of the strength of economy here seems to be upward. And as a result you might be in a position to run little bit higher leverage and generate some higher ROE?

Art Penn

That’s a great question, Mickey. And we think about it a lot. I mean in general from day one, we’ve consistently said 0.6 to 0.8 debt-to-equity in our minds including the SBIC financing, knowing that that SBIC financing and the exemptive relief gives us extra dry powder both for defensive and offensive purposes. I think in general, we’re still thinking that’s the right zone, particularly since we have a reasonable percentage of the portfolio and secondly the mezz securities.

Even if, we always say this even if you could finance mezz higher than 1 to 1, we want to do it anyway. We don’t think it's prudent from a long run standpoint. So again we’re taking a day-by-day, deal-by-deal, month-by-month, 0.6 to 0.8 will still be the general zone of leverage we still look to be within.

Mickey Schleien - Ladenburg

Okay, I understand. And second question is a little bit more on the housekeeping issues, probably. And it's probably I got a straightforward answer. But I noticed that there is a second lien in transportation 100, that's marked at 45, but it's on accruals. So typically, when I see that it might be something where the credit has got some sort of a market quote, but I just wanted to get your explanation of how that can be?

Art Penn

That's the old Greatwide which is one of our non-accruals from the early days, that still a residual small position and not performing well, obviously given the market. So that’s one of our non-accruals that we’ve had for a long time.

Mickey Schleien - Ladenburg

So that is a non-accrual?

Art Penn

And that is we haven't been -- we have not been accruing that recently.

Mickey Schleien - Ladenburg

Okay, thank you. That’s all my questions.

Operator

And next we have Scott Valentin of FBR and Company.

Scott Valentin - FBR & Company

Good morning gentlemen. Thanks for taking my question. Just with regard to -- Art, you mentioned the goal is strong, stable dividend going forward. Just trying to figure out, given the -- appears to still be some yield compression pressure on the portfolio, given, I think quarterly debt yields are 11.7% on originations and the current portfolio is at 12.3%. So I imagine that will come down over time. Just wondering as yields come down, is the response just to continue growing the portfolio, so it's going to offset that pressure?

Aviv Efrat

Yeah, I mean I think we say we are in the slow growth. Assuming the environment is the environment we had a few weeks ago.

Art Penn

It’s a slow growth environment. We are being cautious. We are being careful. We think we can gradually grow. We had some big exit last quarter and we are happy we got out of UP. It was a big, big exit for us. It was a nice realized return but overtime we expect it to be in the slow growth environment. Assuming the environment stays away it was, couple of weeks ago, if the environment in the liquid market gets choppy, continues and that in turn seeps into the middle market, we would expect to be more active.

Scott Valentin - FBR & Company

And then in terms of portfolio mix, I think second lien and sub debt is about 65%, 64% of the portfolio. Is that about where you want to be, is that the ideal mix between first, senior sub and then equity?

Art Penn

We don’t come to the office everyday and say we have an ideal mix or what’s the ideal mix or what kind of mix are we trying to achieve. We come to the office and say is there a good deal to do that make sense, would there be firstly and secondly mezz or whatever and wherever the deals are that make sense, we will do that. So subject to having good credit stats and then getting the right return for our shareholders, we’re very protective of the ROEs for our shareholders. So we’re balancing both credit as well as yield.

Scott Valentin - FBR & Company

Okay. And one final question, and I don't if it's a specific number, but maybe a trend over time. You mentioned you guys are getting a lot of looks from sponsors on deals. Just wondering, maybe there's a ratio or a percentage that kind of looks to actual that get approved, the guys approve. Will they get funding or not it's up to the sponsor but just wondering if you have a trend there, maybe you're seeing more looks, but they're proving less, because of lesser covenants or higher debt ratios?

Art Penn

Yeah, for sure its, I don’t have to cover my head. I have a specific statistics to share with you. But we are turning down more because we are not comfortable -- recently we are not comfortable with the risk adjusted returns. We are not going to be doing six times levered LBO financings in our vehicles.

Unless, there’s a really, really, really incredible reason why we should. So we like that we are sitting here with a 4.6 times debt-to-EBITDA portfolio. We would like that. Our yields overall today are still north of 12%. We think that’s an attractive risk-adjusted return for our shareholders.

Scott Valentin - FBR & Company

Okay. Thanks for the color. I appreciate it.

Operator

And now we’ll move on to Greg Nelson of Wells Fargo Securities.

Greg Nelson - Wells Fargo Securities

Hey, guys thanks so much for taking my questions. We saw during the quarter, we saw several large subordinated pieces coming back at you with yields 15%, 14%. Just trying to gauge repayment philosophy in the portfolio and then how you are thinking about reinvestment risk and getting those type yields without sacrificing on terms?

Aviv Efrat

It’s a great question. And a lot of it will kind be answered with regard to the tone of the market here going forward. Clearly there has been yield compression. Clearly, we have participated in that. We have participated in some of it. We are letting a lot of it to go, lot of the new deals go. And we’re trying to have as high credit quality as possible. So the trend has been in what its’ been. We hope that, that stops and certainly in last few weeks has abated.

And then we’ll see. We don’t mind shrinking every once in a while, we shrunk this past quarter and that’s the right answer. I mean we are not -- again we don’t come to office everyday to say we have to grow, we come to the office and try to find good deals for our shareholders. So this past quarter we shrunk a little bit and that may happen and that may happen from time to time. We are optimistic that between M&A volume increasing in the market backing up a little bit. I believe we’ll continue at a minimum to slowly grow overtime. Perhaps the market backs up more and the growth will be faster overtime.

Greg Nelson - Wells Fargo Securities

Just kind of -- just following up on that. How do you -- obviously the M&A market picking up is a good thing. But when you're looking at kind of the things in the portfolio, the M&A environment can also result in those investments being taken off your balance sheet and coming to market with lower rate sponsors look to do some financial engineering. So how do you kind of think about that?

Art Penn

No, we haven’t -- again, we don’t have a problem seeing deals. It’s a question of which deals we end up choosing to do. Over seven years, we’ve been able to generally originate good risk adjusted return relative to our repayments. Quarter-to-quarter, there is going to be some variability. We’ve -- sometimes we’re going to industry verticals very deeply. Oil and gas energy is an industry vertical we’re going into. At one point, we did a lot in gaming. That was an interesting industry vertical.

So we take it as it comes. We have not had a problem over seven years in different kinds of market environments, but good and bad markets are finding good risk adjusted return. But again, we’re into an investment business. We have to find good investments. If there is not good investments, we won't do it.

So I don’t have answer to question. You see our seven year -- seven and half year track record now, which is out there for everyone to see. You’ve seen how we’ve invested. You’ve seen how we’ve grown. You’ve seen how our deals have performed. You’ve seen how our bad deals have recovered. You’ve seen how we have been able to deliver consistent dividend to our shareholders. That's our track record. In seven years -- seven and half years at this point, you guys can all evaluate what do you think of our ability to execute the business plan. There is no major change from what it was seven and half years ago.

Greg Nelson - Wells Fargo Securities

Okay. Great. And then just a quick one on -- I think I saw that EnviroSolutions was marked down, it was previously carried in a higher premium on the equity position and then it was marked down about $5 million during the quarter. Was there something going on with the position?

Aviv Efrat

Yeah. There is a landfill that they have been hoping to get an extension for, doesn't look like they are getting the extension at this point. So we and the independent valuation firms and the Board thought it prudent to market that equity down a little bit.

Greg Nelson - Wells Fargo Securities

Good. Thanks so much for taking my questions.

Aviv Efrat

Thank you.

Operator

And that does conclude today's question-and-answer session. I would like to turn the conference back over to Mr. Penn for any additional or closing comments.

Art Penn

Great. Thanks, everybody. I appreciate everybody’s attendance today. And we will be talking to you next quarter. Next quarter just to remind you is our 10-K -- our 10-K quarter. So our quarterly conference call will be a few days later than it normally is. We will be coming right before thanks giving. Thank you very much.

Operator

And with that, ladies and gentlemen, that does conclude today's conference call. We like to thank you again for your participation.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: PennantPark's (PNNT) CEO Art Penn on Q3 2014 Results - Earnings Call Transcript
This Transcript
All Transcripts