GAIN - Earnings call transcript Q2 2018 | Gladstone Investment Corporation

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Operator

Good day, ladies and gentlemen and welcome to the Gladstone Investment Corporation's Second Quarter Earnings Ended September 30, 2018 Earnings Call and Webcast. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, David Gladstone.

begin. may You

David Gladstone

analysts you, good Thank This This David GAIN. shareholders is the on common All trading NASDAQ, to [ph] all and symbol and for call morning earnings there. Gladstone of Gladstone, Investment, quarterly stock right. conference Gigi. of you is out

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by stop hello. and say Just

Counsel. for some and Mike, it You'll by the is mean but is on road, lot Hellmold, hear Assistant people away. in And Erich, our of come he our General a now sitting Erich hello. nonetheless, from Mike And say today. - we'll take He I see

Erich Hellmold

regarding to Act statements, those risk factors any you, implied results cause from or all be website found Forms information, XX-Q, on the by and other be XXXX on any SEC. or based a documents can including and with www.gladstoneinvestment.com as that our future to uncertainties Many of the opportunity whether morning, our new right. also law. include factors Exchange www.sec.gov. guarantee publicly our are involve future these materially no everyone. Securities plans, Please of and may certain or to performance forward-looking We note is future current Good take of a under forward-looking XX-K filed we they except forward-looking undertake David. SEC's by or required our statements These in statements as XXXX, all visit though or believe different future be obligation which the sign of other listed including even actual of revise and results. result expressed and results All forward-looking the Thank Today's performance. website factors, Please market call our statements risks our may Act These Securities our we not website update email the that service. events for to information up notification www.gladstoneinvestment.com past reasonable. otherwise,

find September through can Today's keyword @GladstoneComps us You XX, overview Companies. call Facebook, Gladstone an and of also is XXXX. The on our Twitter on results

more issued for So, XX-Q, we release review detailed and Form our ask both press information. yesterday to you

Now of Investment. over to Gladstone President Dullum, David

David Dullum

Thank XX/XX/XXXX, increase we increase morning, you net pleased share share. from per from much, XX/XX/XXXX at our $XX.XX and $XX.XX at very everyone. timeframe did asset per good to I'm to $XX.XX to the so report NAV share per $XX.XX an that value,

complete will X.X% successfully share common of Board to October, as E approved and our that annual per stock preferred stockholders transactions we report Directors several $X.XX to were share. We a and in our Julia rate in Subsequent from financing on. able also announced end quarter later a distribution to our such to on Series increase $X.XX

look were of and our ending forward of as was which this based year fund dividends. to we expectation year fiscal results the Now inclusive XXXX and our in fiscal the because ability XX/XX/XXXX, pay of to-date our

be which of $X.XX program distributions in our common per with also to is a a XXXX. of continuation made We announced share semi-annual December payment supplemental

will in detail, was discuss these of quarter. a NII gains for as Julia than made from portion lower that distributions. capital in these will September our the ended significant quarter more last XX be expect distributions adjusted And We supplemental

timing somewhat on and result more amplified items. expense was in this certain Now will And income detail. by discuss again, this Julia

which signs And generally that's the our before necessarily focus fiscal results. relatively we are be quarterly instead on we and mentioned results variability. on the can numerous business stable, there So, why at end look results year on focused operating a quarter-to-quarter while we when of

but Now forward we business look manage know definitely that's accordingly. the we and also important,

our includes spite we've been quarter's investments, of strong is lower and the values new believe exits and and core do the this that NII, underlying making we which So, adjusted in company we portfolio talk very robust. about though that business, will

of the to touching investment our announced just Sportswear significant exited a We we the and investment end, fees even in payment of sold on in one And in million equity generate we resulted of while. $X loss, performing Logo of is subsequent some a we've So, our in realized success investments gain this on company. retained quarter these we that a the which for Jet timings which realized equity. successfully CCE though investment we did a had the resulted through small and income did in

additional We and million J.R. secured also investment debt this in was fund company acquisition. used the Hobbs made $XX an to by an

of stock XX.X%. inclusive So, was which ended months return decrease our for quarter-over-quarter, compare seen is X.X%. to approximately Wells Index very XX while also would price we our this have dividends of Fargo some BDC favorably XX the the And September in total

gains believe realized proposition the community that value continue with from providing model. business NII for our component in are the and that upside support results equity of to buyout the the the our also have continuing investor growth distributions we of of and we capital So, adjusted

buyouts in to significant transaction. So, mentioned is it of strategy we for and for majority structure really business million. understand lean to and in million position we the a and equity that this use ownership with capital debt first equity between EBITDA for debt that where model are is and direct secured These generally the the provider significant company. $X companies investment The have for and very consists investment differentiated the interest, taxes, $XX it's we before capital in important or combination earnings buyouts us our that and generally invest as depreciation of or second funding

differentiate proportion and debt a you go this credit-oriented and as and So, us the to [ph] direct BDCs. investments from be does forward. credit-oriented portfolios cap And nature of equity our XX% we will debt illustrates this of gains really equity difference the NII cost the portfolio the that our in nature is compared that and of of more when the also see to significant XX% In traditional BDCs. most of certainly around sequences at

practical are them We what the of approach? outcomes of So, our summarized some as follows.

as steady interest debt currently on allow stream pay First, success in quarter-to-quarter as quarter do the and $X.XX of run time grow over the rate. And adjusted investments prior have income as we we last month-to-month are NII us of our our common per will such fluctuations at on distributions now certainly share which the to compared provide fees calls, to this an experience quarter. we will monthly a this mentioned and in portion

I to do to annual NII distributions our annual it's and a We our view before cover on business, results fiscal shareholders. the support of managed adjusted and not distribution the we get ability goal to basis. expect having with year-end an important cover ahead However, mentioned and to our of

capital in that we position upon and for in gains portfolio equity other equity significant gains a that value the an we increasing income potential look distributions. provides and or own the part the exit. life so These stockholders with be in distributed an capital of our other supplemental may company, then each increase income to Second, as over investment

our supplemental as amount consistently. such this XXXX. in to supplemental $X.XX matures, be of June December distributions gains XXXX in the June in three mentioned, December we continue will distribution As and of the per exits point, share from made planned should To announced have stockholders which then to we XXXX. made such portfolio common we And in fourth realize and somewhat

significant a we an approach does Third, the that companies equity advantage. to have of debt being and that in most us the provider give on investment do the influence buy. of transactions In a we portion differentiated some our the of

only the our not such and the interaction to time private opportunity of to us where And us similar companies those is happen limit which necessary time of risk as gives refinanced, with management being the traditional allow so, really debt that operate. involved from be would it but the fund to will equity

look to at of like I'd So, historical performance. some our

at Just to update this, review it from time time. this like this annual update seen XX/XX/XXXX, be an looking and And to an XX/XX/XXXX discussion. scorecard of we've from to our would to do I

posted quarterly on analysis find You in including and further that can graphical presentations also website. our are form in our information

is this cost total debt $XXX rate per of grown of $XXX million from of $XXX assets supporting at million assets at equity to at gone about to The $X.XX some to to is from per million has per share highlights? the value. to are $XXX XXXX a have which million. grown the $XXX from our share share in in run fair portion XX/XX/XXXX assets all, what of has at $XXX The First XX/XX/XXXX. have we Again from over cost period million about at million over of our about monthly October growth which annual XXXX. portion distributions our common grown regular $X.XX in about as an of So,

including companies and and to $XX.XX have on our of over gains those increased have same $XXX that has subsequent XX our as at mentioned in inception We was over XX/XX/XXXX earlier share million in companies, generated per XX portfolio exited these which through net NAV XXXX events $X.XX buyout other that exits Our income from had from million we realized in exit. XX/XX/XXXX and $XX not period. I

the which important equity allowed exit deliver in has model. of cash of again It the activity and from equity on we of is growth approximately the that gains the exit on X.X%, those investments of portion generating assets aspect objective to return continue achieved equity our this in the cash capital to our exits these an future. look us So, on of portion our of aggregate business

with realized of So, equity million. also build in what the Sportswear portfolio in about of and a producing mentioned managed of XXXX a the our gains investment June buyouts, companies past a with that $XX.X sale capital income we consistent portfolio. debt in small case we exited gain again sold is providing We as with new we point, equity our Foam from portfolio go performing retaining November gain. that this of And investment Logo exit week this CCE an significant a as while at generating investment. future in I in the look loss, forward Drew the or We like portion At with the exit we exits? strategy that's

to continuing hold to So, investment it we monthly be produce which assessing conditions. our will preserving of continue the versus be income by exiting risk an to market sensitive for and portfolio part We'll the and remain our guided large the and assets, distributions. in return

buyout are significant new a developing high of priority and our obviously a very So, daily opportunities activities. part

of diligence our diligence both well fundamentals Our sources with in the that in on other At regular on calls independent - are as distributions. purchase of what mix. market business. our include investment process new time We distributions provide potential we before, achieving and opportunity on number help proprietary believe reviewing enabled strict returns us our of sponsors, supplemental to do middle has our I that due partnering due point to to a and goals. in investments with eye as investment the team, as mentioned monthly an somewhat a thorough Generally investment shareholders' investments us and we any include teams acquisition bankers adherence and actively refer our as create management new conducting consistent

assets the addition portfolio and in new existing are pursuing to accretive of value of build investments us companies. to add-on This accelerating a some good allows the creation acquisitions, So, our companies. standalone is actively we for way while

be fund debt As their of additional then their acquisition I October, able we and we'll in expand allow an them Hobbs million in earlier, which $XX service an will to to geographic J.R. invest mentioned in footprint. secure which

for expected competition makes we This purchase the are where it and at time. consider point investments every new being do day. of that production But investments, And however pretty rate satisfy environment high. investments portfolio one could given is conservative equity value low price we a our to close keep this when to any build which mind a in is new with in lead working buyout elevated, and our an for paid a that of appearance a at we us both new and in still distribution returns financial we're income strive goals. challenging our to investment to value So, is approach

We are not a volume driven shop.

our investments three a returns two in provide which current debt The a to cash cash minimum equity which mid-teens. primarily thereby to secured and investing investments These first to cash continue yield low generally to an continue portion operating stockholder return. investment in manufacturing, is cash debt EBITDA and equity like products expectations. investment, we and grow times cash be are generally specialty produces on liens not cash flow yield carry we specialty balance to of So, the our typically blended target opportunity support We're our a and the distribution industrial obviously consistent focus that really products Areas it. expand and changed. to The would interest services with consumer companies with and we of to services. like have

to the part assets, while portion excuse of distributions stockholders. portfolio potential plan. be semi-annual me, maximize to income. gains. executing continue positioning potential, are all exits, as the to undistributed These positioning expected capital portfolio investments from and grow the the will investment thus our undistributed to our realize made We we mature of We'll net kinds and able and the gains continues assets both accretive equity and distributions be generating we're adding to income anticipate exits trying capital supplemental manage of So, for to distributions generally our net paying

strategy. supplemental to and and evaluate to including the such continue we distributions of So, additional distributions Board Directors excuse execute as amount our will supplemented me, of our we ability semi-annual timing, the make

to more So, going some over with performance. turn financial I'm have to Julia? Julia and her detail Ryan on it our the give actual CFO, that,

Julia Ryan

Sure. Good morning, everyone.

As September investments million had million we in included at value. in XX, of $XXX over assets, which fair $XXX

preferred is roughly new term about Our under XX B under X.XXX, these In $XXX our The the our credit and were stock of of $XX.X E Series Credit facility term a borrowings value. liquidation August, carried term be than Small generating for our Act, that liability at proceeds net issued stock million primarily in term rates which new amended Business April includes and Series Series asset borrowings use preferred redeem X.XX. $XXX to outstanding us. million. C We at credit million Availability in rate the facility new preferred coverage both submitted preferred a effective our the stock and which we Series of consistent a will E proceeds stock higher requirements XXX% in

cost we also extending the addition, to and credit facility amended In date. facility our August period in reducing the the increasing include same financing and amended our while revolving size, of maturity requirements

million. assets XX, was million as or $X.XX result per from XX, appreciation $XX.XX of almost a unrealized of June primarily net share net about which totaled $XXX of up September $XX Our as

September income As net million quarter for investment operating $X ended nominal of results, the investment with prior net we a quarter. compared in loss to roughly the as

Now the driving factors at were that let's results. these look

not in the of of being U.S. Foam currently were prior was was and largely investments timing expense, well where incur quarter, non-accrual on June, the this expense recur which under million non-accrual driven which this million given $X.X expenses quarter on that past quarter tax from due to $X GAAP and this did due quarter-over-quarter the of revenue income. were agreement. as due incentive previously $X.X nature interest decreased million exit based end $X.X debt quarters, pick-up due as placed fee quarter. current dividend not variable Drew had compared of gains the accrued for Other but which the million declined investment obviously income to which - increased towards by and and which investment to of non-accrual one bad Net placing by success and of as capital primarily some that income million of million are prior advisory our under to interest on Our we one $X.X required $X.X be fees quarter, investment

All assets hurdle quarter incentive million, net fee in the current accrual result because which the investment in based the an increase unrealized was offset $X.X income-based and capital this The in of quarter. drives accrued $X.X by were fee, we of partially net a which of these of gains incentive $X.X decline overall Last increase million. income was decrease the rates. appreciation the a million increases net quarter

unrealized the a investment and based advisory As realized appreciation exceed such capital net determined capital annually is but reminder, capital depreciation. gains that realized gains with realized agreement respect gains, including provides not a incentives and unrealized fee losses paid to if

However, depreciation. capital capital fee capital unrealized based realized unrealized realized gains sum the incentive the exceed if GAAP, losses of appreciation under is accrued plus gains and

So, liquidated view. of point today as this if is really an

entire a based in current income exclude significant adjusting mentioned share quarter. of investment weighted as incentive adjusted our income gains result When in and of the capital or annual current continues result net the and net NII a accrual, net $X.XX expenses the net and factors be of current of $X.XX I based investment As gains driving any would capital believe to useful adjusted investment the per covered decreased quarter prior viewed be Again, these fee compared to which exclusive income incentive net representative distributions indicator adjusted Current should factors, margin. income quarter We to common period net of in income been a have quarter. investment loss fee. a investment the and that by investment earlier. operations income average

not portion to distributions over and realization the to sheet of paid, If or million is such that gains payment a gains be While of $XX capital when this proceeds based $XX.X result to shareholders. direct distributed to-date i.e. thereof incentive of paid. a XX/XX this be cover show accrued follow the million, is actual roughly of will us at our may income balance to net due yet would fee accrued investment

XX, and common if And of gains be based or realized were September $X.XX per per million or income share. common net you to million share. As incentive undistributed totaled would that $X.XX number that $XX.X capital accruals $X.X gains exclude

recognized realized During loss of million of a the a net we of NDLI. quarter exit result on investments primarily the $X.X was which

of costs. was loss and million financing unamortized $X.X under We preferred which a realized also B incurred stock redemption Series Series term largely of comprised of C our

predominantly in the current was portfolio million As I investments performance net certain of multiples of comparable and of mentioned, increase operating companies. we recorded an appreciation also which to unrealized quarter improved in $XX.X due

Our this was to cost fair value a XXX% quarter.

We an use continue our more third specialist comparables of at as value non-accrual representing fair companies points additional valuation of of XX.X% regarding our market to of portfolio other information party time, external to significant Certain equity XX. provide and to debt of data four this certain loans to September the of related investments. total about are our our investments

an liquidity. in to performance We actively improve operating effort with companies working are these and

the portfolio's increases or X% Our to having This investments. does fees minimal of success rates securities about well between fixed XX.X% not cost. XX% on positioned average yield weighted cash interest-bearing our with our variable were approximate loans was and The rate XX% The rate. remaining debt having allocation debt equity and quarter. floor a investments XX% this on any is yield for with include debt interest at portfolio

of fees collection. second respective any quarter, the per of and XXX% portfolio the For is having quarter. capital had if first of would success having million loans approximate priority be the And of priority we this share. timing XX% credit summary we in unrecognized covers comparison There the fees contractual our David. able are totaling guarantee during positions XX% or over as call, will with a average From back any a collect secured in of this And accrued lien to of end lien total investments our yield or $X.XX of current XX.X% no part have had all purposes, my on success fees, that debt to common you success or $XX weighted we the companies. structure perspective, control the today's

David Gladstone

believe completed some good information achievements quarter significant this the facility and the investment great that successful Julia, Super. success at transactions the same of obviously, the that don't December forward team We XX, being getting At come paying continue and the We and end stockholders. accomplishments a quarter out Erich recession, the believe financial sure is in for and and team XX, can the I third way to are after strong possible the water. ending stock also very $XX should and careful. This we counter seeking year on all March future. XXXX to million quarter time of this build continue so sheet in dividends and a that's XXXX. or And of several pan our future has the preferred this the knowing both we going balance we're including end Dave credit and hail our reported any have economy point, stronger. make that

the like the administration the market. December the sequential soon. the by in been continuous middle in market. financed Through is declared United per new stockholders. the of the common world. States. far questions cry made we impacted Directors business $X.XXX this middle middle hopeful business, of we we're the delivered and at in and per run the our stock and is changes the monthly our in are a on founding monthly business share. the about be the XXXX XXXX. distributions it Board from settled date October in less this from of we months be historical all economy of nonetheless, fund middle market of has code the December have largest distributions middle can XXXX. should we've That's The of an about the time and benefit a distribution company the XXXX, reduction strong booming is November market in excited rate middle $X.XX the love. third of to call, It's think common U.S. market We've and environment but this and ones to Now in regulations going a are market share rest of the And The matter the October, annual the the tariffs, cash market now performance a It's I tax on U.S. point XXX in In paid $X.XX this of since our of supplemental per each will of for share in about of strengths

addition, distribution number made that our of to part the we've regular supplemental In now a is that marketplace. of approach

annual as XXXX, maybe share September and it's our at of of over the future a company assumption the all these a the time, just million time the If $X.XX $X.XX of paying as about X.X% we to or distributions about that here yield on an $XXX Please continues distributed payment solid paid of of based total per last note be and each distributions. one that is supplemental about is As stockholders. $X.XX XX, at payout out, dividend the will we've did of a share at regular two shares of to is the of stock no say at outstanding regular able X.X%. stockholders common in central of of X.X%, we'll the an the number the little we about goals guarantee to share Company price supplemental believing $XX.XX it pay yield it to distribution per common there stock yesterday for rate, the well. the it dividends. about At that future to on $X.XX distribution we company common I'm make as rate payer close, a of the look distributions be the year then the as the or current the was and current

pay ours As simple company of earnings. most investment in XX% a of has to regulated know, its like you terms out

For may calendar by XX, XXXX, of XX%. the of September current XXXX. time is September we year about at in estimated our the end XX, March change distribution capital XXXX year gain as That and the portion the

on get to So, return don't until one out tax you. put we something that down your can

per value maybe on above share traded par depending series are the one $XX yield of Our preferred X.X stocks around two their which series. X.X

started distributions summary, we to for summary. have we're shareholders is Hope and if We've to supplemental luck potential get operator going in and show will in continuous some had in investment have seeking an to we'll gains. estimating ones Investment the I'm some some your good also past distributions returns monthly we future get questions And Just before some continue and investors come you with on all analysts. attractive and good our and investment. the Gladstone few on, a questions the strong maybe well. the from as some now from capital

Operator

Henry [Operator our And first Coffey is from from question Instructions] Wedbush.

now open. Your line is

Henry Coffey

Excuse Yes. Good morning, everyone. me.

particularly some quarter? quarter You've been running me around compare sure through wondering and $XX could quarter I the you if million the the of was investment first drops. as I'm simply it you your second adjustments know to mean behind now we income a go if at I that for million again.

Julia Ryan

Henry, earlier. of I mentioned Those drivers it's the sort large of Julia. what were

is and… decline So, total there income a meaning top-line investment in the

Henry Coffey

Yeah. Yeah, that. on That's wanted where I focus. to

Julia Ryan

was it. components quarter A, two And there that to were this being non-accrual on on investment being accrual last quarter. one

top-line well as as pick-up a that investments incremental your of prior the quarter non-accrual. were historically some of on in past due So, natural you interest decline the from have

So, you quarter. have income previous higher in the

In Drew addition, exited Foam in June.

So, and you almost have interest full a from… other income of quarter

Henry Coffey

company What the that was exited?

Julia Ryan

Drew Foam.

Henry Coffey

Thank Drew you. Foam.

David Gladstone

sold We were getting we but it. Yeah. income,

in the income have obviously we quarter. So, didn't

Julia Ryan

those just main drivers - as and yeah may you variability timing from us. were the So, other see from than

Henry Coffey

some put you behind numbers adjustments? those Can

Julia Ryan

great. would separately me out call be that after to this You reach can

David Dullum

Q&A, those. the on put everybody the can We so gets numbers behind that

David Gladstone

is Yeah I this - Henry, Dave. think

lose I Drew obviously as that. Foam so making exiting, interest the we I forward, think it's right a mentioned, interest the have And it's And say acquisitions. you're important, bucket, that. the regardless as your continual going question new think is a base going a the in a good fundamentals refilling we of have business think we're now consistent said And good from think coming way the you and from before; position about where of I to one. in But I clearly, companies. you really income

and very as Sportswear, of exits, mentioned forward gain mentioned, ago we couple which on the We Drew exit seeing well. had also of a is capital looking a are company. that just days nice Foam We really Logo we made we that good

a there's little So, bit of transition. a

of And so, based these in on fluctuations. time to that things, it's any will have of some the point really important we in these timings - on and assets our based of some some quarter-to-quarter of understand these

hard However, for it, something some we fees, to more as the to look such of stress managed and because companies dividends from that exited reasons other we I'm very because as lose good we've are incomes know income annual it, basis et do exit on we mature try important cetera. that's we that at going an additional manage we

we you will a variations quarter-to-quarter. balance it's it. how think - But see So, certainly these and that's about so

Henry Coffey

we the there look at $X was about line, debt million When of you bad said G&A expense… Okay.

Julia Ryan

Yeah.

Henry Coffey

did the item last NII? that's that GAAP NII was And variance is your then the on was line. calculate how you your $X.XX. - And What adjusted

Julia Ryan

It's simply using $X.X the capital million. fee GAAP NII based of gains incentive plus the

Henry Coffey

the that moving line? just into So, down below

Julia Ryan

Correct.

the will look bottom If the of press be a release there towards reconciliation. you little

Henry Coffey

you. Thank All right.

David Gladstone

and or he'd end the to would said, Just of up down, Buffet have Warren day Henry, variable on you X%. return to and follow at you consistent was a He have up get X% asked, down, the a up like X% once one. rather but

won't company about. think talking I around bounce we this So, that's bad a as were little bit, going be to but is as just it one

came anomaly that this an I just think quarter. that's

next So, question please.

Operator

Instructions] [Operator And Mickey from next question from Ladenburg. Schlein our is you. Thank

open. is Your line now

Mickey Schlein

non-accruals. morning, a couple Good I about the have of everyone. Yes. questions

didn't non-accrual, You've you've S-O-G much placed, know SOG but valuation change some out don't I or knives quarter-to-quarter. specialty put on [ph] if its

an you that Can what outlook? and give the us implies feel on the I update happened impaired. there So, debts don't guess you

David Gladstone

you. Good Mickey. Sure It's talk to to Dave.

So, we as have that to senior a whenever might because have have before debt, talked involved a lot obviously, majority clearly know I - number some have about we have a of of on this we cases we go the cetera. in the you et usually with times lender do have company we non-accrual, obviously

we we can have to cash it a with non-accrual so, we temporarily perspective. work them, so will And from may flow put on that

company continues a higher the reasonably - be. to are it than well. bit we'd we got perform like specifically, SOG with We've to the So, leverages

there. gains amount. is. just frankly companies are is which cap other is with good down non-accrual really true where same couple thing we're the putting So, still it it on producing that That PSI of

have And as do we the thing. we right said, so, with companies, to these got work we've

so, find expectation historically back is get as we work And them, as accrual we'll that to have we our a done. through way to

business get from So, it's on cash to that this perspective working in right so management came with be. would forward, that those function where us we non-accrual and flow we do lenders of decline of the the cases in quarter, things our senior are company with a I gracefully need working temporary move teams, the the a on to say the can

it might I at So, that it's about. as take but about this look six panicked technology again, concerned months, we are or not something particularly

Mickey Schlein

merged you G.I. for non-accrual it on performing. predecessor it's a Dave, at were did think. has I non-accrual but and been because they now the on valued merged company, of like Plastic par. year want a again, PSI the the you on was quarters, with PSI SOG couple to Precision up company Southeast But new and I mentioned ago follow that

business dramatically So, you the that you the in that companies? last has didn't changed few when anticipate merged months something

David Gladstone

from CapEx in performing to some if some a we some some instance detail But we had about merger, things. things want. et systems, Well, did do company did had after couple had The and we can incremental put We is more this ERP for when actually incremental have of an things getting perspective. talk do offline expenses merged EBITDA to we you we them, need we cetera, happen.

to enough the its it cover - senior frankly a the to to was it's an flow opportunity have cash felt few months both it bank, could. we back lender producing where actually it debt. essentially We also next again give interest But point operating to we to like get and important are there over our a

an much now, significant pretty the in that the were enterprise would exit don't if whole out see So, debt obviously we regard because which as to value, having given exit we we where equity, we're it come in look believe and regard. an we'd that impairment not right we would at we going also

end of positive the fiscal temporary it. calendar is associated situation So, have believe its think over this we a above actually the other at end year. flow again it's or which we'll We we're year. as this we the to of look a be forward and - to think and We certainly cost going that cash interest we with costs

hopefully be on the we're year the a calendar going it's time next to where managing business again accrual. back So, to in point some

with made some combination sense work needed just to sense, have still it operationally. makes that we things fix to it. the through We So,

Mickey Schlein

if wanted little million because usually that question with allowance dive bad last or more expense got it of to a I else? just I something may, do sort that's doubtful question. the there want expense. of debt to bit the housekeeping deeper One understand $X the for of accounts. an just for into Okay. I the to an account Is is something accounting nature a

Julia Ryan

component is an small for us doubtful to on of quarter its recorded going and this relatively non-accrual to it previously SOG and driver accounts then The income to down. which written immaterial there. two-fold allowance was be That's the that having relates biggest

Mickey Schlein

Okay.

a is than anything of accrued else? this previously reversal more income investment So,

Julia Ryan

Yes.

Mickey Schlein

I one or don't give was prepayment question. I the know us can And a exit? on there if whether had just success fee more Logo sense Dave, Okay. of any you

David Gladstone

Yeah, there one. was small a

Mickey Schlein

for Okay. your time. I Thank me. That's it appreciate you.

David Gladstone

Thanks Mickey.

question. Next

Operator

Gladstone questions. like I this the At would turn to for further remarks. no showing call time, over closing back am Thank David I you. to

David Gladstone

calling at we're for look end to you opportunities of January, next going the continuing And happy time. capital the Well, call. February you gains you be into I That's we'll see all in. think and and get timeframe, we this thank you're when very

Operator

participation you and concludes today's Ladies program. conference. the thank for This gentlemen, your in

You disconnect. may now

Gladstone Investment (GAIN) 6 Nov 182018 Q2 Earnings call transcript