Prospect Capital — Fiscal Year Ended June 30, 2026 Earnings Summary

Financial Performance

• Net Investment Income (NII) for the quarter ended June 30, 2026, was $77.692 million, compared to $78.457 million in the prior quarter and $79.043 million in the same period last year.
• NII per common share was $0.15 for the quarter, down from $0.16 in the prior quarter and $0.17 in the prior year.
• Net Income (Loss) applicable to common shareholders was a loss of $38.091 million for the quarter, compared to a profit of $26.408 million in the prior quarter and a loss of $226.369 million in the prior year.
• Net Income (Loss) per common share was $(0.08) for the quarter, compared to $0.05 in the prior quarter and $(0.50) in the prior year.
• Total Investment Income for the quarter was $155.761 million.
• Total Operating Expenses for the quarter were $81.825 million, with a reimbursement of administration expenses of $3.756 million resulting in Net Operating Expenses of $78.069 million.
• Total Assets were $6.4486 billion as of June 30, 2026, down from $6.8049 billion as of June 30, 2025.
• Net Asset Value (NAV) per common share was $5.71 as of June 30, 2026, down from $6.56 as of June 30, 2025.
• Net of Cash Debt to Total Assets ratio was 28.6% as of June 30, 2026, compared to 30.4% in the prior year.
• Net of Cash Debt to Total Equity Ratio was 40.7% as of June 30, 2026, compared to 44.4% in the prior year.
• Interest Coverage was 366% for the quarter ended June 30, 2026.
• Balance Sheet Cash plus Undrawn Revolving Credit Facility Commitments totaled $1.6027 billion as of June 30, 2026.
• Cumulative paid and declared distributions to common shareholders reached $4.8097 billion as of June 30, 2026.
• Distributions per common share for the quarter were $0.115.

Guidance and Future Outlook

• The press release does not provide specific forward guidance for revenue, earnings, or NAV.
• Management indicated a focus on exiting targeted lower-yielding equity-linked assets and real estate properties to recycle capital into higher-yielding corporate first lien senior secured loans.
• The company expects profit-enhancing results from the adoption of AI and automation initiatives within its businesses.
• Management highlighted a strategy of operating with one of the lowest debt leverage levels in the industry.

Business Segments and Product Lines

• Middle market lending represented 85% of investments at cost as of June 30, 2026.
• First lien senior secured loans comprised 72.5% of the portfolio at cost as of June 30, 2026, an increase of 840 basis points from June 2024.
• Second lien senior secured loans comprised 11.9% of the portfolio at cost as of June 30, 2026, a decrease of 454 basis points from June 2024.
• Subordinated structured notes were exited, comprising 0.0% of the portfolio at cost as of June 30, 2026, down from 0.6% in the prior year.
• Real estate investments via National Property REIT Corp. (NPRC) totaled 14.2% of investments at cost as of June 30, 2026.
• Six real estate properties were exited in the fiscal year ended June 30, 2026, yielding an unlevered investment-level gross cash IRR of 18% and a cash on cash multiple of 2.3 times.
• Originations during the quarter ended June 30, 2026, totaled $166.321 million, with 90.5% in middle market and 9.5% in real estate.
• Total repayments and sales during the quarter were $45.827 million.
• The company exited Echelon Transportation, LLC in February 2026 and Valley Electric Company, Inc. in July 2026.
• The sale of Valley Electric Company, Inc. on July 1, 2026, generated total consideration of approximately $328 million.
• Portfolio company investments included new first lien senior secured loans in Safety Solutions Financing, LLC, Abacus Dermatology Management, LLC, and Eyefive, LLC.
• Software company investments represented 2.3% of the portfolio at fair market value as of June 30, 2026.

Market and Competitive Landscape

• The company's middle market lending strategy focuses on companies with annual revenues under $750 million and enterprise values under $1 billion.
• The portfolio's average net leverage is 4.9x, compared to a market reference of 6.1x.
• The portfolio's average cash interest coverage is 223%, compared to a market reference of 160%.
• The annualized net realized loss rate for the company is 0.2%, compared to a market reference of 1.0%.
• Since inception through June 30, 2026, the company has invested approximately $23 billion in over 450 investments, exiting over 350.
• The investment level exited gross IRR for all exited investments is approximately 12%.
• The investment level exited gross IRR for middle market lending exited investments is approximately 14.4%.

Risks and Challenges

• The press release notes that actual developments may vary materially from forward-looking statements regarding AI implementation and business optimization.
• There is no assurance that investment opportunities pursued will be consummated or that acquired assets will not be subject to future write-downs.
• The company holds $562.3 million drawn on its $2.1 billion revolver as of June 30, 2026.
• The company has $36 million of institutional bond maturities repurchased, leaving $264.5 million due in November 2026.
• Non-accrual loans as a percentage of total assets were 0.7% as of June 30, 2026.

Management Commentary and Tone

• John Barry, Chairman and CEO, stated that Prospect is actively assessing and implementing AI use cases within critical business processes and views AI as a "transformational game changer."
• Management expressed confidence in the company's innovative culture and history of first-to-market accomplishments in the business development company industry.
• Management highlighted the successful sale of Valley Electric as a key achievement, noting a 20.5% realized gross annualized IRR and 4.8 times multiple of invested capital.
• Management emphasized the rotation of assets into core first lien senior secured middle market loans and the reduction of lower-yielding assets.

Other Key Points

• Prospect declared monthly cash distributions of $0.0350 per share for September 2026 and October 2026.
• Senior management and employees own 26.7% of all common shares outstanding, representing approximately $0.8 billion of common equity at NAV.
• The company has a Dividend Reinvestment Plan (DRIP) offering a 5% discount to the market price for participating shareholders.
• On October 30, 2025, the company issued approximately $167.6 million in senior unsecured 5.5% Series A Notes due 2030.
• The company has three separate unsecured debt issuances aggregating approximately $701.4 million outstanding with maturities extending through December 2030.
• Program notes outstanding totaled $614.9 million with maturities extending through March 2052.
• The weighted average cost of unsecured debt financing was 4.78% as of June 30, 2026.
• Unencumbered assets totaled $4.243 billion, representing 65.8% of total assets.
• The company exited 58 property investments since 2012 with an unlevered investment-level gross cash IRR of 24% and a cash on cash multiple of 2.4 times.
• The NPRC real estate portfolio included 52 properties as of June 30, 2026, with an aggregate unrealized gain of $185 million.