GAIN - Earnings call transcript Q3 2018 | Gladstone Investment Corporation

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Operator

Good day, ladies and gentlemen and welcome to the Gladstone Investment Corporation's Third Quarter Earnings Ended December 31, 2018. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, David Gladstone. Sir, you may begin.

David Gladstone

Thank you, Heather, and good morning to you all. on Chairman conference Investment analysts call Investment, stock Gladstone, the this of David GAIN. common earnings symbol quarterly for traded is of and Gladstone is Gladstone This trading NASDAQ, shareholders and And the GAINM out and GAINL. stocks preferred are there all for in. calling you Thank our happy certainly talk shareholders to always our shareholders We're potential and to and analysts. future. And and current provide the and of the its business something to as a you as update an give like investments, we'd on company well environment, the view in wish more the We this appointed time. is do but this to often Also see you by have an invitation to us. stop and

We Washington, are here in McLean, Virginia, just outside D.C. of

stop So with say the are LiCalsi. the now hello. and Counsel area, Secretary, Michael by and you if General Michael? out We’ll start in

Michael LiCalsi

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

sign visit again, up service. notification opportunity website, you for also our the gladstoneinvestment.com, e-mail ask to take once to We our

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

ask information. the So and which detailed President, I release to Form will With more were review XX-Q, over of that yesterday David issued press to Gladstone for turn we both Dave? presentation Dullum. Investment's you our

David Dullum

per thanks at actually Mike, to much, have and all. book results $XX.XX per we I to value compares this per resulted NAV NAV. or at companies that in the very share part $XX.XX very quarter, successfully along did asset gains. at some so XX/XX/XX. operating nice X/XX/XX in pleased This and we realized that $XX.XX equity progression our at in morning, NAV solid increase value good continuing and our buyout really to that and share was improvement report net the our or share, increased the exits with very X/XX/XX, completed of from significant am so portfolio growth values The in

companies, with we increasing add-on we quarter approach and the portfolio of the the in buyer this value size new made our line and also So one of existing investment closed several investments.

the distributions continued also XXXX. payment program our semiannual December per with supplemental in share $X.XX We common of

ordinary year gains and from significant for cap made XX.X% from total income. distributions end that be XX.X% of XXXX, and about to expect capital gains were that portion We would distributions calendar about a from our

as XXXX well. was about is cap percentages income ordinary where Now ordinary also X.X% that overall gains to distribution or the of increased this now and recognizing calendar compares XX.X%, distribution

quarters. of also last higher Julia than the CFO, a will bit XXXX, two as NII adjusted our more So ended discuss December XX, in detail for quarter each our the was

which to there can is I've quarterly why this be is Now variability results to generally do fiscal business the goals and investments, strong. relatively and results important distribution as exits, previously, for year portfolio shareholder strive XX, company focus meet our based values and indeed maximize mentioned we underlying is to reiterate believe new is which operate is stable, the order our in because March end generally we on while value. our very core be including we We our and business that

December and continuing Now of of at was does BDC we return inclusive to the months have our seen down some affect dividends stock the decline prices, XX $X.XX course including in own total which XX. which ended XX/XX, for quarter-over-quarter

providing combination in debt. proportion in the million, and or debt consist first also buyouts seem and buyout investment component gains, equity lien use have with sizeable invest strategy companies XX% capital share the proposition between However, could realized the position where we're business that, to of distributions from generally are portion of back and equity amortization $XX we a and provide secured indeed closed differentiates good of for upside increased buyouts $X the debt adjusted These second this equity significant equity, at these continued continue be structure and stress the is yesterday ownership a capital funding annual before the investor back the results earnings of equity Again, difference we for of with or and transaction. believe EBITDA, of again again to first million share share that that helping all price business we a always try portfolio oriented after for support about and our community interest the in taxes quarter-end and to The debt bounce credit news this a to the value growth model to traditional XX% capital the I providers significant $XX NII is cost. us that and in around BDCs the a is here and investment direct the price. on model our from in depreciation,

other equity XX% to oriented portfolios However, one are XX% compared to be up which of investment BDC debt most any credit new XX% debt. equity, and typically of as could course XX% around

deal-to-deal generally work might debt. going but XX% it's XX% out we to equity, vary again So around

as approach? So like to some We'd of let's summarize the call of are outcomes it practical follows. somewhat our what and the expected

the First, the pay what our currently to fees and provides and of $X.XX investments income common debt share time interest monthly steady portion is distributions per course of grow we're success stream and over our of annually. on

As as we've month-the-month adjusted to experience mentioned last such the on quarter calls, quarter. we fluctuation will NII compared in prior and quarter-to-quarter this

been and business a the However, making. distributions annual support continue to and and hope to of these again we with manage shareholders any of have to than our our fiscal goal adjusted supplemental end other having that year the results cover NII view distribution making we

cap and significant own we each other so we that over Secondly, that the in positions the investment equity portfolio gains value for the of with increasing equity the increase exit. company, in do provides life income or look upon an the

to as With and made in and these distributed distributions. we our potential part stockholders income other supplemental gains capital

continue XXXX. such and So from planned $X.XX distributions December portfolio we common matures, exits supplemental and per gains as again amount our share We've and in to to of made in should realize the stockholders four December XXXX, June June somewhat consistently. in

we our the creation. times to in the provide traditional ability that are gives the what a or refinanced do fund. being This equity of similar proactively provider over with Third our portfolio interaction management our the being in action, in transactions advantage limit Again, differentiated work with is we with influence Thus from turnaround but action gives of a us a the of value or approach some debt and a interaction you that would for us changes portion equity do significant we indeed do debt large portfolio and portfolio of approach some involvement other have you that not an with companies of the position aspect assistance we most of management plan private find to investment only to risk issues with to a the with the the our and have our companies companies in that company we means need time buy. time that. individual will take of

historical try performances. just We quick So let's we've keep to take us at been where just with inline a look where going. and we're our

a XX/XX of give in then of form in are So recorded find on the information more of which XXXX, you graphical and our update I can presentations quick XXXX from you posted through website. very March course will just

of in at run We a some about had common $XXX per portion $XXX grown $X.XX in this million, in share this have XXXX $XXX have over decrease equity October $XXX period grown so of value. regular million roughly is at and total caused million this a is course come exits which assets The rate includes per this to million, we year distributions assets time, about And portfolio the of the growth successes in our is over cost of that this at portion fair our XXXX debt cost at grown from total $XXX supporting about share assets about annually fiscal from million this point. $XXX early, to this. has to noted $X.XX out million significant of about as little from This to from quarter-over-quarter. in period exit monthly

are at inception have increased generated capital in We period. buyout in amount at our XX in actually gross gains to at these had million we've XX/XX/XX. from $XX.XX 'XX $XX.X The NAV share exits million the XX per and From higher. realized other income same exits. over on XX/XX/XX through about the portfolio exited the companies. So companies And over net $XXX $X.XX

investments. to the cash gains that portion this to allowed with of continue and buyer investments to an line X.Xx. we value it aggregate our the while generating capital growth achieved continue equity new from exits these do we has equity portion us So the make cash approximately our overall look And equity goal of the of into on is exit of on is and activity the Again, equity objective in deliver this assets creating our objective of which return future. again and

So a let's exits. think about some and going about our of we talk exits lot forward

exit with will it this our portfolio capital portfolio. providing companies or of So buyouts, realized new from and as managing the we we we also strategy consistent of call our investment of be sale with is the equity build portfolio the portion the the as gains

gain with a of with XXXX we again in the and gain equity Star million, $X this and about in quick of investments Foam XXXX year-to-date, a in we've million Cambridge gains that about Logo on of sold just of about is $XX million, gain made. million, $XX gain this these December Sportswear Sound about of November with XXXX Seed December with of Drew So a a review June $XX portion year in XXXX

loss million, of couple exited loss million. offset them One, in from partially exits gain also the we CCE $X our $X a about total the a a we and about So NDLI against investment in these for investment things. but about equity was million at $XX sold we of of

investment. did we performing retain income debt - However, an and are at retaining producing

a So holder of loss SOG about restructure company million. and is [dead] two this existing point. and realize did we that still XX/XX/XX, we're did we portfolio Subsequent a simply our [announced] $XX to of at

of one Now, Company with really have taking a do had we're And little anticipate part we this with the shareholder this a in action preserve advantage we conscientious planning of fundamentally action was to SOG, take to some take we where value patient are to one. good those be going a and our and where recovery. to it's position, allowing we action, is us a in again frankly on tax and

we assess sensitive business, which is look and assets all versus risk-return monthly to want conditions remaining guided sell hold to our continuing from will of the to necessary So, or income exiting the also by in of portfolio investment continue we at the you be when distributions. producing whether the market

new how buyout, we're doing see. Now on let

well that believe has management day. enabled developing the buy provide to So do course have supplemental we fundamentals diligence significant both do of various process investments distributions daily part consistent already generally shareholder actively business. with that sponsors, the us we the create on these activities monthly And are investment regular our new when heights investment partnering what making. buyer as strict and every our calling due a and is adherence activities They're continues our opportunities. to our returns sources, try bankers buyout to so thorough in independent distributions, and in of new we our been as teams do on middle-market help We

reviewing new are potential on and any at time investments new we Now point an diligence in a of due acquisition on with eye achieving conducting goals. number our

existing add-on In addition standalone of though actively for we're our some new pursuing to portfolio acquisitions, accretive companies. investments

building existing acquisition was for we existing do it and million making course year-to-date continues it this invested assets grow add-on platforms to and also at we mention creation we we will this, continue At to Bassett to $XX allows one Creek about could Of another value an the if of of of while incremental to in a in we that in in would deal new was as Creek October. and companies. valued And roughly various that it Resources make portfolio some look Hobbs, R. $XX Bassett feel where able $XX $XX point accelerating we million is had the buyout then in investment that companies. also in of those is our certainly in I is which million be November. there. add-ons incremental investment new investment which And a April, million buyout J. also Educators made

are needs challenging does all be. high that this So to versus we competition close the is financial certain new investments where our us new expected environment investments high a paid make equity the on still in to though return it because are are what conservative and all our prices approach still for and value buyout also really is in in for really pretty being we

goals. at of might that to we portfolio in while satisfy every and trying any annual So strive income day, and a distribution rate it's continue know we this equity and do again it both this we look what an to on an value time, basis production is in your lead important and point investment appearance build new of to our in low to at

solid So a achieve volume investment acquisitions. to driven to result new that we're of not going good will we goals but be try firm with our

equity to target equity We providing cash-on-cash Xx will to return. continue investments Xx

low typically make primarily As investment the cash-on-cash do the and over portfolio first blended equity we balance carrying and I in expectations. are current which the support returns secured yield had our dead stockholder loans teens due that a yield these our cash this debt and produces equity mentioned earlier, for to cash need are distribution cash return, investments which Xx we've generally lien

middle as focus be so lower Our manufacturing, I mentioned it really companies earlier, to market changed, as such products in services areas specialty on. and investment continues especially basically light and some hasn't consumer are

plan. So all in all executing going continue forward, we our will

distributions able portion both hopefully portfolio and and portfolio portfolio and to semiannual adding to gains. this evaluate as we distributions Board generating made investments the our the anticipating thereby expected to accretive as and do mature doing will generally be while and income the shareholders gains exits investment potentially maximizing fundamental of shareholders. capital paying will such capital gains we of realize undistributed we as of grow to continues assets well assets strategy. net semiannual, additional distributions We amount of our be and timing Directors supplemental will to for manage of to are potential We capital exits position we going distributions the be redeem are with now distributions undistributed a from We’re our additional and and our which income. the the to net ability supplemental These equity make including as continue

Ryan, I'm to our detail on can in all we’re about financial And performance. looking we are all a she at So give over CFO future. feel turn the Julia quarter, good some to in it headed going actual Julia? what and now more and where good the we

Julia Ryan

good Dave, Thanks and morning everyone.

apparent in sheet some And which Dave million decline heard caused this exciting total December which we over discussed quarter-over-quarter. you successes assets as earlier, of we million included $XXX had balance the investments quarter the had in at Looking XX investments. $XXX as in all

primarily in million perceived credit exits. which a liabilities borrowings that $XX was roughly result lower as of line again in of Our consisted to our quarter from outstanding compared prior investment paydowns of

We also in preferred $XXX term stock. million had the pre-existing

is this an of Our unrealized and net compared offset per partially $XX.XX a quarter that net quarter depreciation. assets $X.XX share $XXX last is which primarily totaled end about of the by of which gains million were realized as increase to result of with

December we the X NII X with results, the quarter million operating of ended quarter. compared let's investment prior look of factors those driving a million for in which at loss results. net the to And As

$X.X timing was they quarter quarter in nature was additional decreased success by the million this bad Other So looking about the increased and and income. due as of Then debt tax exits variable million expenses. at interest timing expenses current of which which one income in driven to and $X.X debt million by lower dividend $X.X well the quarter. largely increased investments, given the later income fee

incentive million discussed higher this which three, two due on from million I fees. which partially were the and $X.X $X decrease an base nonaccrual based the by determine last quarter, $X assets investment a a by income which placing then expenses a result As primarily And income one, increase gains debt about the incentive and fee debt to These drives quarter. fee. bad incentive decreases offset we advisor in were to partially investment quarter million the increase offset higher incurred in hurdle of of was of last income-based the credits the capital net

unrealized unrealized beyond capital but the accrued not our $X.X was which realized gains-based this under capital gains million was said a fee details be under result due I quarter GAAP required of U.S. accrual currently the incentive but and looking partially incentive is have $X.X this is at million the million know Now depreciation. times to I gains-based investment were which and Last was offset fee, by quarter's the to is the that’s realized respect exceed realized so losses accrued capital advisory and capital If appreciation capital annually realized fee unrealized capital incentive GAAP depreciation. gains gains-based gains, a provides differentiator losses realized that and unrealized capital however, plus incentive determined Under the realized of unrealized exceed fee a if with the not sum depreciation. capital but gains-based such here agreement appreciation. and paid which gains is

were as accrual. income it’s our investment to you gains-based So balance net capital incentive exclude fee adjust liquidating sheet GAAP And if when our today. the

income Our in capital get net of compared adjusted activity of $X.XX as does we that unrealized to NII share fee NII representative the be the per And to and raised to quarter operations the the roughly useful capital exclusive that believe fee. continues and incentive gains-based common not include quarter. indicator realized was investment the incentive adjusted investment prior gains-based weighted-average $X.XX a this and

So full-circle our current again coming net period by not and doing a and prior investment current covered so distributions and adjusted annual income significant margin. quarter

net While of over-distributed roughly tune our $XX result the million balance incentive line gains-based XX/XX fee a to the may show of accrual million. of $XX that is called investment sheet a capital at income direct item almost that

accrual So almost per is shareholders of income This distribution balance end sheet that would would this million removing and million as per the either net share. share. for totaled available the million $XX $X periods incentive realized to be be almost in $XX quarter in or for fee the When undistributed future or cap distribution. of redeem amounts gains over-distributed our common roughly $X.XX or or common $XX amount as cash gains-based

you’ve gains. mentioned. at largest again for gains realized portion exits almost that and this others Seed were unrealized But and of the were offset were which thought million at $XX Dave of there gains we exits very and by Cambridge was $XX looking of the of significant recognized and So partially that like gains and million Star such Logo realized all losses that were given those the about successful quite looked included which that they period and again

was And by million investments $X about existing of recorded I exits. unrealized that third-party also the and and of those and additional performance comparables XXX% still a depreciation our use valuation regarding of remainder the operating portfolio companies. consisted related previously all depreciation million significantly related as appreciation cost in mean data in equity to decline $XX all of quarter that $XX we significant We predominantly to of due net investments. such of provide to value about continue of fair specialist to this certain depreciation more of recorded unrealized The net over and market unrealized those information the those million to external an EBITDA other relates was assets to portfolio to or points certain

to represent to they are four debt loans continue liquidity and we performance, X.X% value to the our of have of value. and that investments total continue companies operating with improve work nonaccrual on fair We and about those

our on Our loans today, XXst. contractual share. were for and increases $XX equity portfolio's which any debt success cost There XX% the portfolio of over XX% about roughly a we loans back per at having any collect well that rate is The covers standpoint having positioned I'll securities my equity debt collection. David second have XX% of And rates as have between credit lien approximate priority fees XX% cost. lien to allocation variable December these we’ll have to and to our part interest was debt all float yield it weighted a and minimum fixed unrecognized At million December, interest-bearing a success exclude or and course Gladstone. having having quarter we turn XX% end to and fees. guarantee of From and no had priority was secured of priority control measured being $X.XX of is X% cash first at The common continues timing over with the XX% be success remaining the fees XXX% totaling this rates. over average able a yield of that of or

David Gladstone

economy in add-on should bring All presentation a made right our realized information that and filed where up-to-date shareholders new Michael gains Dave, to some investment buyout that everyone the at has bringing of reported number this significant team of including the this all good great all little were that - good Julia, believe you position The both quarter the XX, and investment XX-Q accomplishments going and is yesterday and to are three which company. transactions we exits lot what successes investment [indiscernible] quarter we in net a have going end way the bit a in then no bring. in company since is of economy the ending quarter The forward XXXX. XX, continue I to but stronger, team and the is March XXXX an in The December future will these fourth getting increase is knowing income.

the careful team way certainly build is adds to and investment seeking being dividends one to we that balance goals paying their strong strong the goal. with So and unforeseen to our sheet counter achieve balance of primary a sheet a are is to being able

Now on that code regulations to the administration, continues the government changes tax and to of reduce the is delivering businesses.

the think area matters to a that performance middle stronger. ones so get strong business can be soon market the The nonetheless market all that less middle is impacted in U.S. hope financed but questions tariffs, the about I XXXX. we settled going like by we businesses is in have

and from We the founding market that's are since is the the market We've excited is world about third the love. that the this we new economy been business U.S. the strengths benefit and largest and will market of company booming this market. the environment that U.S. in middle in fund in middle middle and

have these supplemental made per share as call of the year. these On common monthly four and run stockholders per of addition $X.XX each XXX for our and of of sequential the cash months distributions $X.XXX XXXX, declared February we've distribution Board common an date distributions our rate of our well. Directors made per March of annual to share this stockholders monthly at the January, distributions in front, to Through of

it the outstanding pay XXXX, continues of see common of the total continuing the or us look As the common time stock regular of currently Company and per made. the be that. year, the with if and the that's stockholders and X.XX%. two $X.XX yield. were $X.XX distributions then about at the and anything these annual in assumption number distributed $XXX that distributions the at yield don't the close, is about the solid Company at And common future do about dividend the stop payments pay December distributions $X.XX to Company million $XX and distribution we The per the for future current last make based on X.X% rate share as from to that's stock of has on payout the shares I of supplemental going share the will a to did XX, price yesterday's is At

is distributions Board hard of Board at team there's regular for a in guarantee trying regulated that be supplementals of the of the to terms in April. meeting but its most at no calendar Our to look the will And the that that investment or our know the the XXXX will is central increase earnings. payouts. the supplemental Company. of role distribute this The regular note payments XX% is Please the you company paid, Company, that simple even has

believe to analysts continuous show who what X.X% and I distributions at a monthly questions like from investors have you friends return other and some come income. capital strong seeking Investment between on distribution about dividend need supplemental series investment $X.XX Heather also gains to stocks is we'll for those For Company. each stop and summary, trading and hopes the the in good place Team Gladstone you this of steady on and of park that's attractive current calendar some $X.XX, and of for The two preferreds the payers or front, if back year you the estimated capital from so In money are do. $XX gains on to now above yield somewhere $X.XX, of of portion let's the distribution XX%. is potential preferred their investment to have but continue

Operator

Joseph Jefferies. question from first comes [Operator Kyle with And Instructions] your

Your open. line is

Kyle Joseph

picked volatility how David to market about little you the two of you questions end related mentioned, broader talked bit a towards up the that. quarter,

from any in Company then outlooks market for competition of performance growth you've in terms recently the any on First, increased and impact your growth impact and is how seen volatility? of terms

David Gladstone

David don't question. take you that Dullum, why

David Dullum

So Kyle, I mean understand when you stock want market to volatility common stock, be action? sure I you say

Kyle Joseph

about market. No, talking broader high indices, yield I'm equity

David Dullum

problem. no Okay,

moderation volatility more and don't quarter look really it to same. of are I looking has in at, this equity on - can of the the we terms before or get now say that deals like more deal. So I private that is honest potential look put at it's firm a not and partially There's at think a bit opportunities as I'd this leverage a really, think new we of looking about the a suggested it I be if in I that than traditional overall result valuation the amount

doing in past say see competitive little what months. this say I XX been change quarter, this is companies that we starting trying growth return. which of buy just keeping it's is that to as to maybe a need bit in think get - a can last but I'd of EBITDA the And quarter model it's a current our it's still to we're competitive to kind of Xx the has you regard works that and we're find overall Xx - sort those

say a it's day-out. So about all same, just opportunities. day-in We're all and working out just the in on continuing, of I'd just number it slogging

we indications we the one submitting number are companies of of put frankly with the out interest that buy. two or can that respective up that We ending are

not keep where to I'm helps are, where that to positioned we're approach. have with know we we've Kyle we but So and worried I consistent about about I'd don't say just answer if our being been

David Gladstone

we the on be lending It to years. completely add to with The other it's place in market Kyle competed - institutions banks. David Gladstone. has XX Kyle, that like banks changed And last and used to that

government the banks in places maybe like making maybe X%. market middle the loans the of the XX% is making the SBA are Now place,

lenders being and So government. not like us, covered rest marketplace private today not of the really the is meaning private by banks

of that. It's little crazy more volatile do to and will today a do to something some better deals marketplace to might and to different and out people So really is because raise money out than world a them the was have we risky. but them that lost lose

more and we to I ahead, is steady marketplace Kyle. volatility going continue Go So to that you're in to underwriting the but think stay do businesses. best what we're going do see and

Kyle Joseph

any have you of seeing sort a leverage your that's the guys given debt-to-equity of target elevated down But in leverage? changes all BDC if and at refresh us range we're given the regarding Obviously if changed from you some repayments. came can industry perspective the

David Gladstone

you that? Julia, with comment? jumped Dave but no, why already is don't answer on Julia, answer any The a

Julia Ryan

has for. it nothing to really as changed Kyle, approach leverage has in our

Board April. our we're be go our close noted, "Asset approve XXX% nowhere effect been reduced recall to XXX%, from which you into so metrics. those this you significant, would to If Coverage" as downs has did to pay But

David Dullum

mind that to Kyle, bit consider I keep more equity answers traditional little mind oriented what lender. that, to private ourselves add a the you. I and Keep And to as than question, we in earlier gave we got in relating would a

more we're companies So driven by value opportunities for. looking buying provides of enterprise sort that we're in that a

are to there as that debt two overvalued, we in up But markets. go more that that equity to things; struggle the for mentioned, think the one, we're of Gladstone side pay the David where going fact are able we of So some is not and companies against potentially there. private volatility then certainly get guys is leverage that

part from so to the that's speak the So in right. let's a but on changes we're our the to loan marginal, our with not leverage there's books, leverage business regulation to not then looking perspective increase a put even again that then say

buy leverage good doing change we those downturns those the that and know enterprise itself ones business you we're and can so that policies on that have any to any so reason the to we we finding withstand does so as and know get forth. are just necessary leverage levered, will companies highly sort keep companies values, the lend as more will in. is values, What as within leverage Julia that So and I don't the we're we think utilize, going of our not we to said around

Operator

Mickey next Schlein Instructions] [Operator question Your from Ladenburg. with comes

Your line is open.

Mickey Schlein

you Just can wanted Curious than what market us some caused give so sold value insight? exit, congratulating its the Cambridge much for to you if start interested with I'm to on the is good result. be obviously that previous a how just behaving mark? in fair more very Sound

David Gladstone

to values. obviously working in a I relatively it that Mickey, the where me but of Julia while we've think in it the for you thank relative correct the value I in because we quarter, a indications for not we on prior we terms could got value we on had And saw terms of what close comment. for we which of disclose been think frankly this were

part say the had good growth three of this that are quality in folks that years - about ago. good And are the of us. decent because got representative the end the middle for and market. ago it growth for that, acquired this a want shape certainly represent having that work out it of as pretty we the would multiple we it course is to could at businesses in pay higher there money that quality to management of of all middle a said market So all ourselves quality since sold we Company around to good I of good range put earlier, being asset pretty years pretty, sensible robust And criteria said few good David company of value good pretty bought is a we you the know willing at just had kind multiple was

and So we're for and happy team we part because it, management timing work didn't exit frankly, again in to we force company on good very we sold was all agreement doing, it we pleased with with the the participants. in have the were our a overall were kept but all it

Mickey Schlein

of of those credits sort the give Can on I'm very services the quarter. meaningful aware what advisory an manager are a provide and idea large for or occasion that went into a that not process to breakdown how of some you pretty are management bit that this sure and works? investors base fee us little external

David Gladstone

Julia why don't take you that.

Julia Ryan

externally on advisor a company fund nail provided and head generally receives hit services the would the advisor incremental the So the and fees are here direct from Mickey advisory management the offset portfolio to payments what back advisory otherwise pay managed the credited portfolio obviously the to you advisor we meaning those the to for as were to companies, our fees.

So provided of depends timing on advisor again what they payments in and can be very the terms services. those variable really of it

probably explanation that’s can the So give. I best

Mickey Schlein

is nature could helping four was Cambridge about advisor of was or that more the up sale advice example this I mechanics, I doing? the or it for curious the Julia external Just is I'm the nonaccruals advisor the on what understand the what the negotiate is work follow

Julia Ryan

be of yes part of That of those so it services. could financing transactions are types part

Mickey Schlein

feel if questions Dave more how you and today? of quality I Couple pipeline about size do of your the can.

David Dullum

with it’s X. work really beyond we and exits mentioning so or as existing a pretty that’s shape, pipeline I’d good I say XX, about would on good day-in But feel The on XX right speak. I keep said X to is think robust we say other are on is when focus of I Mickey we’re mentioned on to I I these day-out probably have - scale as things and I'm so companies. on we now in not to things again portfolio work obviously

to of goals that we investment, an them shot and You have out XX, if the for can't going say in way generally a the objectives the every at have we you I are annual my think new a to predict our but think on reasonable want up mind. a overall so, X pipeline, of acquisitions basis again in sort activity quarter of one new build because levels

Mickey Schlein

And to can over give Dave the very some us few you extent the whether insight expect next course of as some on flipside you what - the are you exits quarters? to meaningful

David Dullum

Sure.

think part sort first bit with on company various we way position you’re our better the about of to on to distributions timing market incremental do again is think from forward cap more the next exit if on build now a can of good to in something companies. try the somewhat a we and that management nine, from And gains and to continue with gains going the I the that be do little to my either we’re want to that as managing either exits ability look those. so an the that now consistent my months consistent perspective a you or in can based alluded in create we XX these multiples six, that our pretty about forward getting exits. we’ll but is some we think with of going think based as - And just to at, not of able start sell-side portfolio, through mentioned I at talk continuing As it

So short it. answer is, we’ll keep working at

think we’ll and some year over it on the we see stuff working next so. new We’re coming or

Mickey Schlein

quarter also the is I an outlook there for somewhat earnings would company, about you meaningfully you in problems. which the think still markdown on fairly Can us update you the optimistic this about imply give the ask PSI, last debt company? you call but were Wanted the to qualitatively

David Dullum

year well. actually started It Sure. out that this pretty

is call size I about with with business. think pretty - internally decline the optimistic I'm because it business a the still overall very EBITDA. to we've significant result still just had issues manage it’s of good - a overall of EBITDA some obviously The business valuations in

we So it did, do good to fundamentally. and were we but yes made just decided the given I where what we business valuations about sense feel pretty

terms the cetera. quarter management of last the in say on working have some been et things And of we over issues

answer again point. about I it short so decent feel pretty And at this

Mickey Schlein

back whether put wasn't last though be of it restructured terms on you in take going is still some I SOG that that or And to time? clear will month, guess accrual

David Dullum

I one to are Actually here. with again looking that but it's it's changes get fundamentals got would of into variety for forward, some that will made we some and where going overnight. reasons patient I good be know say right we just We’ve done happen take not one time. think think to have Again, that we’ll we things

Mickey Schlein

sort And appreciate your just questions. this one housekeeping I time of have morning.

the a affiliated reversal works and caused was I'm quarter, I how there that? that think just curious dividends in for what

David Gladstone

Julia?

Julia Ryan

the dividend one or have by whether as of that tax constitutes should of be the income different that that in that sort driven a information. happens change payment and in get this manner reversals estimate a change gets is dividend recorded a cleaned result up we better payment those we a is is estimates we of use so recording best as income of the receive Mickey that thing as you to know we estimate as at estimate time

Mickey Schlein

Julia. this congratulations you on for that. solid Thank and it morning, for Okay me quarter. That's a

Operator

turn to Gladstone David I closing am I’d questions to for at this the further time. call to back showing over remarks. no like

David Gladstone

quarter. the you next this call. we'll calling All for end right, and in thank all That’s listening you and of see

Operator

Ladies may you program the a and and does all gentlemen, day. Everyone thank participating have in conference. wonderful disconnect. you conclude This for today's

Gladstone Investment (GAIN) 6 Feb 192018 Q3 Earnings call transcript