GAIN - Earnings call transcript Q4 2018 | Gladstone Investment Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the Gladstone Investment Corporation's Fourth Quarter and Year Ended March 31, 2019 Earnings Call and Web Call. 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. to host like David today's now Gladstone. would introduce for your conference, I

may You begin.

David Gladstone

all in. symbol year for Chairman you that’s and thank Well, calling Gladstone the Investment. conference to Investment, is analysts ending of for on This This the year fiscal NASDAQ, XXXX traded call a shareholders Gladstone your to thank for calling provide in. GAIN and stock of preferred analysts all some view our under GAINM and always business you happy talk current we have and with shareholders GAINL, environment. and the We're and is

exclude obviously what changed a We've goals the view last key is last the this are the you during companies and and how the new income, gains future. investment the these Our BDC Hope company different other to it's not reports help understand year on company you of seeking because happened to you quarter exclude capital like report. give so and section the of income. and of the from most just history

here our Michael? and Counsel from General Secretary, LiCalsi. Michael we'll Now

Michael LiCalsi

by the documents expressed implied our and to be listed XX-K we results or actual materially statements our that may performance. factors our David. Securities our forward-looking to although believe current of forward-looking everyone. cause regarding all morning, including Today's include forms Good any many on certain involve Act uncertainties of reasonable. XX-Q, file and be future and from may call Exchange other those XXXX, statements we Act with on statements, under other risk results forward-looking factors And the different Thanks, These risks based Securities XXXX, the SEC. including future factors, plans, which these

our website, to update website, or market information any www.gladstoneinvestment.com, all these find www.sec.gov. And information, the of future revise which also SEC's of of guarantee that is result or is obligation any a we publicly new law. Please not can no otherwise, forward-looking undertake results. future You statements note these required which past is as or by or a performance as events whether except on

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

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

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

Gladstone Now I'll of it Investment, back the that, with Dullum. over turn Dave? to President David

David Dullum

and morning, Mike. Hey, everyone. Thanks,

for the generated pleased active X/XX/XX. $XX actually four been So exited report results million. fiscal did of and buyout a portfolio quarter we we realized operating net companies, and to which I'm which year for that year, very and gain a this that our is fiscal about solid very have of has It

investments buyout two new roughly $XX We also million. made about for

which our and is about value, at asset from $XX.XX increased up share is X/XX/XX. book value, that share net $XX.XX per Our at X/XX/XX per

share And payments And totaling annual semi-annual each. gains. with some have, an $X.XX per run we to So that rate from we along successfully this monthly year, over exit our our really $X.XX were common distributions equity our increase. of per distributions increase we part with realize NAV had pretty able supplemental was to fiscal the increase in resulted in values during This buyout portfolio that share. of of also the pretty nice year, $X.XX significant we an did common a in increase the companies, --successful maintained

per and end $X.XX our be and in year common approve to from that's Xst though, increase share. these subsequent April, to Board the in $X.XX an May did will June semi-annual payments, Now fiscal which and up

we have large distribution of result these a what portion the were required to gains. decision shareholders. deemed and pay generated, that gains we a also to to took Therefore, tax common retain a significant as So we realized of declare net call these

maintain for and to. capital way we that offerings prudent is common capital for a to minimize reinvestment the need secondary this need growth if believe and stock may of we raise Now to also the to portfolio

in the us therefore line term, down So allows the and near costs to it gain. reduce pay credit of also our on interest to

Now some I companies, lose debt we that this of further want exit to those the say income, to point, investments. these on for successfully interest will as obviously though, we

to income on because really this strategy also stress So a our are we and distributions we providing are on And monthly yields to keep current shareholders again, new grow level of of monthly investments. basis. to to mindful hopefully the a them levels, mindful need buyout-oriented at consistent which we need make is dividend being I of these we of with this do very fund. But meaningful as

So a underperforming. have our now few portfolio companies of been

it result short-term, provided these in chance in value So results improving improve losses these and shareholder some we've done in restructurings past to realized the companies. We've protect We the structures enhance provide proactively, and we proven best the these companies significant to changes. successes made while And operational does this the and of to may this the restructures long-term. for in work. capital

a an buy and transactions, that of our debt have differentiated a our when some we valuation It when the into portion also investment projections operating influence in future plans approach internal and And so we most properly prepare that and us are these and these consideration of of own are is equity give results. reflected of believe significant we account of on does in advantage we steps emphasizing taken do portfolio the income provider them. our being companies our that and worth our into

work and do that's very have same part traditional But our management And some where to for involvement the how our to provide happen that thus with And time-to-time, fund, is we mind this with the had private similar equity will year So companies do we operate. we again, to teams last in we had with making to thing. future keep necessary. companies to as portfolio we the this able the important in a the have changes from we will assistance probably do over and capability.

grown Now, we're but X/XX/XX the a the record. total we realized to assets the million that we've year, the pleased we'd million past track that: by we we at significant fair the X/XX/XX we've from also exits, about with pretty fiscal way, is XXX results of strong This and review one, believe along gains over thought had way. created In of value. as inclusive years XXX the numerous that this from the

share run 'XX. rate now as from grown I Our in an have regular per fiscal $X.XX share on shareholders, annual fiscal per distributions $X.XX in mentioned monthly 'XX to to

net have XX per That's us on NAV growth increased our of has the good in about of deliver April, this since increase at target, $XX.XX. much XX to shareholders. cash enabled times. very we to the X.X buyout to and now us capital did It in companies approximately equity on companies about Our that In at from million income our these allowed our in realized And exited about XXX our our What's distributions was in that. has portion portfolio through share XXXX. to equity on aggregate, generating gains objective aggregate, for is gains than mentioned, common feel to higher in activity other exits exits pretty generated the the cash $X.XX XX but previously We these from Also and pay portion inception million common and this several interesting call assets. exit. that we date per we $X.XX we as returns equity our of is these has of X/XX/XX share. over had supplemental have this our what that

we a Tread repayment investments in par. aggregate the in the us Corporation position included to of our and So net very these the our to of debt of these build as we today million resulted to years. exited other end, and to believe in we're on though, portfolio the $XX both companies good look which investments, and investments access past the other to that to Subsequent Jackrabbit, in forward, we year the proceeds in capital, success about at one

So while are the plan of generating obviously approach of accretive that our our in focused income as we on are to of the conservative and we buyout assets. our extremely value, both environment portion be buying well equity as companies to assets our be continues portion to do tend competitive, to the

continue some future, experiencing increase will and Directors and and and opportunities. additional gains buyout activity in be amount income. companies as are our gains. Board will from investment capital we semi-annual similar announce these as capital we'll supplemental portfolio tend the distributions their of These of some We mature of supplemental near to to our were to paying these well gains realize make capital new and We the exits generally distributions distributions which manage made additional We declared. the are timing able that expected to distributions net we're ability those recently evaluation hopefully anticipate able in to new and acquisitions. to undistributed as be net evaluate further deemed And their

going So this it quarter. over to performance detail to CFO, she'll Ryan, with for Julia actual Julia? give more turn that, I'm past the on our you

Julia Ryan

net consistent non-accruals, quarter, Net variable and and lowering adjusting was remained X.X this largely fee net expense assets given which quarter increased expenses by with accrual, average X.X in common borrowing investment proceeds due the dividends hurdle. adjusted increase quarter-over-quarter, decrease other quarter. results lower investment driven million as placing incentive which credits December, income in the by current drives the increased outstanding, [Meridian] income. Operating coupled income it incentive in everybody. income income and morning, current primarily in average a exclude fee the about and from was on the to interest timing from based advisor the of result of weighted by interest based success lower a X.X Good therefore capital per to share and was income was given a the net $X.XX gains while million investment When decreased in fee offset partially and the million nature sales net income

investment believe net unrealized useful is of indicator realized adjusted not fees is incentive gains investment income exclusive does income include representative associated which activity We such based or a investment capital that as fee. of with continue operations any and to net

on primarily investments net losses which $XX.X XX, the ended Sorry, result of earlier. million, we XX Dave restructures are noted During quarter a of recognized December the March -- realized XXXX,

of million the net portfolio current recorded companies. which depreciation of companies net of appreciation unrealized investments of and was also in million unrealized those to improvement million portfolio in appreciation We unrealized operating consisted restructures, about of certain existing of $XX of predominantly due $XX which previously an $XX reversals of quarter performance upon

at the looking sheet. balance Now

a as result asset share, total As net the of are and partially compared under over by to $XXX assets coverage Liquidity a the companies. realized deemed net strong $XXX year-end, of totaled Net our increases those result assets line to unrealized in down $XXX of portfolio over our of primarily remained distribution. available million is XXX%. on as last which $X.XX quarter million or $XX.XX losses. taxes of credit increased about And million about value primarily with per $XXX from million the appreciation last of the of offset the over quarter,

capital while accrual reminder due million, $XX was incentive paid the show our fee be to net accrued under $X.X million investment not may is a that that a income gains direct balance is result this As over-distributed of GAAP. and of sheet roughly based

net entire for today's undistributed capital basis, in $X.XX realized to million incentive back now As of be And shareholders the David. amount or be year-end And book available share, if of fee already is covers to a gain This distribution net paid. gains the which net plus is totaled to common million investment future part period, of would this about deemed over $XX the on you, distribution. accrual per that based my income $X were call. and even

David Gladstone

company. well as shareholders. job you as Alright. to distributions, that Thank this XX-K some investment good other potential hopes monthly significant our was And this continuous seeking filed from exits you. gains buyout a Dave great well year yesterday investors you year good was distribution is successes including continue investment of for Julia. March ending has continue The the have investments accomplishments Michael report. some Team and and two to everyone number a and good including a presentation, That and team add-on of a new yours in was should return informing supplemental income. fund. on done on realized to as during strong your capital investment this fiscal bring gains in team excellent This show is transactions. the these In reported a all summary with up-to-date buyout next XXXX. the XX, position that of good fiscal front attractive during investment

income hard As noted a gains April is triggering as pay income six dividend funds and different per or at per as from regular only this capital Board work in out well declared The that gives months cents fund to share $X.XXX every they month. are so. a

rate run return The yesterday stock it out XX.XX, per year. is as on a per that's dividend. the was share X.X% the dividends So at keeps regular if company the paying now $X.XXX about trading

share. dividend in you Board per a do December a for almost a run the for In declared extra the addition, June hope and share per Board $X.XX. the of rate $X total I per gives That will $X.XXX, $X.XX $X.XX share same of

a can payout will sale doing know share And cash work from this these now shareholders more dividends. paid it sets at that's the like deemed at March per for our end outpacing is what to move many for the it's kind for course, But tax so since $X.XX it's So about And can't money why it end I is the for earn the year, that the much know know the stock let's it are. NAV shareholders and held forget dividend out a as figure help don't more the stock good benefits my since about company pay that quite and basis more company year excited goes is it's that share. that Market XX, of this, stockholders XXX-T not IRA. but Form deemed and course have up benefits they it's XX, I working in yesterday in deemed March quite booming others I But and IRA per to cost paid no of my not out paid time. future. keep of of I And me up money money that's company March. XX.XX, reported stockholder in XXXX, the hopefully not per income out And now dividend at company do and IRA deduction I States for the to we helping a raises the have at goal. amount at that plan money And today, plan my tax low, the XX.XX, of over United share price And administrator my as stock dividends. don't us want Government. doing -- guarantee, a are. file the my I by dividend Mr. $X.XX in It of where the I there's because stock of a of what the to I'm but stockholders and our our now course, field. the to the is the if people but the to not know by the we after but plan you anyway, I and get there's it our some our rate, forget of of $X.XX up, get trading to up X.X% XXXX. in

hope are you I and happy I'm So too.

you even the Now bigger people, to guarantees today? would and is ask course, work questions how to now for. XXXX them that's have than on the working No And but they harder of a tell come team has for plan year. be last Gigi can what

Operator

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

now open. is line Your

Henry Coffey

of fourth was for related has in it observation, analyst what detailed lost while objectivity, my think A will the net around. that expense, I've this the shows impressive credit amazing us full been up been congratulations guess the well I but the stock very, what to was write-downs that I the very couple the and questions, can as has up tell receivable as it colleagues year? if since in my picked all you make interest quarter lower we

David Gladstone

to reading you are from? I'm where it. Henry, trying follow

Henry Coffey

No. It receivables? you your -- on credit isn't wasn't and a a or in overhead, related either have though loss there loans

David Gladstone

interest may missed I'm sorry. there, it. have income much. it some can't I we reversed but Yes, be

Henry Coffey

the And about I'll helpful? reach in bit little in go. a if articulate We'll the would what could out actual call. then that after quarter realized losses portfolio were you be the the

David Gladstone

So Dave?

David Dullum

Yes. Dullum. Hi, It's Henry. Dave

recall is where, have of is Henry companies, equity. to So debt that investments sort some EBITDA restructuring had we couple the of or do I mainly it's EBITDA, but to either interest. as necessarily around the of either not cover not positive This enough we a quasi some transferring of our to some mentioned -- the all

near forward. the term, for concerned and and it we So about we're the hard obviously is businesses take look at a operating what do going performing

with the a is mentioned, When from is then happen. management cetera, in some to try to of and work someone around. and some adjustments that going businesses. buy of to I bring the that generally as structure the those done it many the of We've the So you are that in those help businesses, to ability we have We business able turn to et make to past. capital is, be our things outside do And have you get degree. nature team, times either

loss, at that’s pretty went the the realized and to had couple then of down companies say, So the do loss realized new a opportunity already took those in those general, but again some we by to of ahead that it's gains. do of net obviously, way, not companies the written and per restructure, being that significant generated we have with, which that around we a benefit would actually because been had some

for that I to number mentioned. out netted that the So

we perform to will We like part what ultimately hope. later do. necessarily, we we as it make we then but to a basically recoup of to don't do that's companies So need do it can and have these we on it

Henry Coffey

companies look Were identified up specifically those go obviously the XX-K, it there? in can we

Julia Ryan

they SOG the Henry. with and were Yes, And Mountain.

Henry Coffey

of ones and the Julia? other SOG was the what name

Julia Ryan

The Mountain.

David Gladstone

It's a T-shirt company.

Henry Coffey

Thank been Great know for know one your had a quarter work. much. hard you second thank you and very I for that And all yes, with you while. working I --

David Gladstone

on to the to next follow that up before question. just we And go

some basis a make so are coming restructures -- the management in Sometimes make a to can management lower they new have money.

If you they've any the and quite investment. got lot in, get before debt leave their come they just more get a can money a throw the when people outstanding, in to return over on

that's of bring we one that. in the So ahead do reasons sorry. Gigi next the I'm question. Go and

Operator

our question Instructions]. Thank from from next And Baar] [Ryan you. is [Operator Jefferies.

Your now Jefferies. line Pardon open. is from me, Ryan

is Your open. line now

Unidentified Analyst

is Hi. morning. good on [Ryan Congratulations the This guys. quarter Joseph. for Good Kyle Kohr] on

So to related I restructuring. had question your a

to you relative the that So paying we're the Mountain which said to of SOG and non-accruals quarter. you your attention historical. restructured outlook on regaining remain the What's in some Obviously, elevated the restructured investments forward you been outlook year, they've terms and the non-accruals that? that any in have resolution moving do timeline then on to that elevated what's the of for And you've that? this

David Dullum

are year Hopefully, would start there's you generating those we we Yes, company or if of And around Again, to that. income going think know get period certainly like we’d be able to in can't to we we're do cash I a if will, that answer a turned tight, some chance is to the restructures. doing the time. that so. those see you typically, a definitive give for a wise, on where

given are near the that other end of that this we're that of improve some in the year, companies non-accruals, to the As impacted think far going see as I regard.

elevation, don't certainly see you think to that the non-accruals year. say, hard, and see further improvement I on going we’re end we expecting calendar by and am you have working it's as of tell So, an any that that really we're I to will we just on this

Operator

question another have we Coffey from And Wedbush. from Henry

now is line Your open.

Henry Coffey

your fairly past, companies. Can how is going macro to large healthy think companies in your current things us you with perspective a how way, these know do to are or you you've affect the sense us overly you general you your given wrestling what I a thoughts? environment David, kinds going to arm is give or the not China affect you the think exposed are think of on

David Gladstone

at in Chinese only other where If not they move and that The sell everyone the are you we thing in bring there. there's that about Also moving it, it countries China out a of REIT about two shape this it's to a got of like the in is looked almonds not in terms In nothing China lot other Only good but some anything China is -- else of and else. couple having companies worry situations about from of And China Land, about Land, of to of haven't at Gladstone lot it. sell thinking for buildings. stuff from product are business company, that companies, China. it. done other Gladstone we've Gladstone mean to going much example, think I looking if some a bringing got Capital, its there through finally, in you really

some be enough on what's they companies, pain, of can not because but to down our not them. yes, going much, between So

Operator

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

David Gladstone

again in and much we'll next see calling this Thank very listening to you you Alright. everybody quarter. and for

Operator

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

now disconnect. may You

Gladstone Investment (GAIN) 14 May 192018 Q4 Earnings call transcript