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Prospect Capital's CEO Discusses F4Q12 Results - Earnings Call Transcript

John F Barry III

Thanks, Brian. Over the past year your management delivered record prospect net investment income and record prospect year-over-year growth in the June 2012 quarter as well as in the 2012 fiscal year. Your management also delivered $0.47 per share growth in net asset value per share over the course of the last year.

Net investment income for 2012 was $187 million, up 98% from the prior year. On a per share basis, net investment income for the year was $1.63, up 48% from 2011. Net investment income for the quarter was $64 million, up 113% from the prior year. On a per share basis, net investment income for the quarter was $0.51, up 66% from the prior year. Your management delivered strong net investment income growth while keeping leverage low.

Net of cash and equivalents, our debt to equity ratio was less than 36% in June. We have substantial unused debt capacity and liquidity to drive future earnings. We estimate our net investment income per share in the current September quarter will be $0.41 to $0.46. We just announced more shareholder distributions through October which will be Prospect’s 51 st shareholder distribution and 28 th consecutive per share monthly increase.

Our net investment income has exceeded distributions, demonstrating substantial distribution coverage for the current tax year, the prior fiscal year, the last three quarters and the cumulative history of the company. That excess coverage is more than $50 million in the current tax year, demonstrating our conservative approach to distribution payouts and coverages.

Prospect has now paid out more than $10 per share and more than $500 million in distributions since 2004. I will now turn the call over to Grier.

M. Grier Eliasek

Thanks, John. Our business continues to grow at a prudent pace. As of today we’ve now reached more than $3 billion of assets and undrawn credit. Our team has increased to nearly 60 professionals, representing one of the largest dedicated middle-market credit groups in the industry. With our scale, longevity, experience and deep bench we continue to focus on a diversified investment strategy that includes third-party, private equity sponsor related lending, direct non-sponsor lending, prospect-sponsored transactions, and structured credit.

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