Advanced Flower Capital Inc. — Third Quarter 2026 Earnings Summary

Financial Performance:

• GAAP net investment income (NII) was $3.5 million ($0.16 per weighted average share) for the quarter ended September 30, 2026, compared to $3.5 million ($0.15 per share) in the prior quarter.
• Total investment income was $8.6 million, down from $8.7 million in the prior quarter.
• Net increase in net assets resulting from operations was $6.4 million ($0.28 per share), up from $5.4 million ($0.23 per share) in the prior quarter.
• Net unrealized gain on investments, net of taxes, was $2.9 million ($0.13 per share), compared to $1.9 million ($0.08 per share) in the prior quarter.
• Total operating expenses and income tax expense were $5.0 million, down from $5.2 million in the prior quarter.
• Net asset value (NAV) per share increased to $8.55 as of September 30, 2026, from $8.25 as of June 30, 2026.
• Investment portfolio fair value was $289.6 million as of September 30, 2026, compared to $289.8 million as of June 30, 2026.
• Total assets were $395.1 million as of September 30, 2026, compared to $399.7 million as of June 30, 2026.
• Net assets were $191.6 million as of September 30, 2026, compared to $187.3 million as of June 30, 2026.
• Weighted average yield on income-producing debt investments was 13.3% as of September 30, 2026.
• Asset coverage ratio was 197% as of September 30, 2026, compared to 190% as of June 30, 2026.

Guidance and Future Outlook:

• The company stated it will continue to allocate capital where it earns the best risk-adjusted return.
• No specific forward-looking financial guidance or revenue targets were provided in the release.

Business Segments and Product Lines:

• The investment portfolio consists of 18 investments across 5 industries as of September 30, 2026, compared to 17 investments as of June 30, 2026.
• Senior secured first lien debt investments represented 100% of the portfolio at fair value.
• Gross investment fundings were $4.6 million, with $3.1 million allocated to one new portfolio company and $1.5 million to four existing portfolio companies.
• Net fundings were $(3.5) million, driven by $8.1 million in repayments and amortization.

Market and Competitive Landscape:

• AFC targets lower middle-market companies generating annual EBITDA of $5 million to $50 million.
• The company employs an opportunistic approach across all industries to maximize risk-adjusted returns.
• No specific market share data or competitor comparisons were disclosed.

Risks and Challenges:

• The release notes standard BDC risks including the ability to maintain RIC status, potential conflicts of interest with the adviser, and regulatory limits on affiliated transactions and debt issuance.
• Risks include changes in interest rates impacting results of operations and loan values, and the ability to locate suitable loan opportunities.

Management Commentary and Tone:

• Dan Neville, CEO, stated the company earned $0.16 per share in net investment income and grew NAV per share by $0.30 to $8.55.
• Management highlighted repurchasing shares at roughly a 58% discount to NAV, adding $0.06 per share to NAV in the quarter.
• Management emphasized a commitment to allocating capital to the best risk-adjusted returns.

Other Key Points:

• The company repurchased 285,656 shares at a weighted average price of $3.46, totaling approximately $1.0 million, generating $0.06 per share of NAV accretion.
• Year-to-date repurchases (nine months ended September 30, 2026) totaled 1,125,062 shares at a weighted average price of $3.34, totaling approximately $3.8 million, generating $0.24 per share of NAV accretion.
• The Board authorized a share repurchase program in May 2026 to repurchase up to $5.0 million of common stock, expected to remain in place until May 4, 2027, or until the $5.0 million limit is reached.
• A regular cash distribution of $0.05 per common share was paid on October 15, 2026, for the third quarter of 2026.
• Debt-to-equity ratio improved to 1.03x as of September 30, 2026, from 1.10x as of June 30, 2026.
• Net debt-to-equity ratio improved to 0.49x as of September 30, 2026, from 0.53x as of June 30, 2026.
• Total debt outstanding was $197.0 million as of September 30, 2026, including $115.0 million under a secured revolving credit facility, $5.0 million under an unsecured revolving credit facility with an affiliate, and $77.0 million in senior unsecured notes.
• The weighted average interest rate on debt outstanding was 6.2% for the quarter.
• A management fee rebate of $176,420 was recorded for the quarter.