GAIN - Earnings call transcript Q1 2019 | Gladstone Investment Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the Gladstone Investment Corporation's First Quarter Ended June 30, 2019 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 call is being recorded.

I would now like to introduce your host for today's conference, David Gladstone. Mr. begin. may you Gladstone,

David Gladstone

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provide update the to to and happy to provide of shareholders always view analysts current are We an our a environment. business

two here. of to is give there future. help So also in view a goals the you happened understand what you and to past the One

Now out we'll LiCalsi. He start Michael Mike. with Counsel. is General our

Michael LiCalsi

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

www.sec.gov. all our can of website, is on website, these which You the find www.gladstoneinvestment.com or SEC's even

as our take notification for a results. required new also or the not service. gladstoneinvestment.com, undertake publicly as sign any e-mail that We Please of you up that of website, to information update statements guarantee obligation result And again, note is whether future no information future market revise otherwise performance once law. we past events opportunity or to information, visit our by ask a except or any forward-looking

on us on Gladstone is there The find Facebook, Companies. also and @GladstoneComps, keyword Twitter, can You

an call As is a results simply June XX, overview XXXX. our today's of reminder, through

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

that, we turn presentation can back Dullum. Gladstone the Dave? over with to David Now Investment’s President,

David Dullum

welcome our very morning, you, analysts. Thank everyone, good and much, to Mike. and Hi, and shareholders

pleased of So quarter for XX/XX/XXXX. very year, course, XXXX ended first of our operating and results I'm earnings ends which fiscal to is June quarter which this report the XX, solid

of Our was of income the $X.XX potential, And and per up for fiscal share. the quarterly I'm the investment of adjusted year per $X.XX our which outlook portfolio, the share, per income dividend net mix last balance $X.XX greater quarter sustainability generating share than encouraged the based the from ending and our XX/XX/XXXX. was current of on quarter for

June, in buyout investment Also we buyout investments in made million one for two exited April. new $XX about and

of exited exits portion since increase on our fund monthly cash-on-cash approximately the with distributions in portfolio to equity and Same companies to have total time while generated we investments. XX So we continue for XXXX, return these this inception X.Xx actually grow and those shareholders. assets,

per end Additionally this asset value $XX.XX net quarter NAV strong share. at remains or our

XXXX first program we of is This second as $X.XX the XXXX. per year made distributions our increase actually supplemental an share made semi-annual We reflecting the annual a gain realization June as per $X.XX good monthly the our at maintained rate we $X.XX distributions common results in for semi-annual the in supplemental calendar calendar in of for and from XXXX. that area, December common our distribution the capital share per an share

of additional per to $X.XX Board is share recently a which September. paid in approved supplemental Our distribution common also one-time be

exits associated we generated to Now this and realized the one-time distribution this that recent distribution is with made the earlier deemed that the year. gains related were

year, ended which net As the a in reminder, we generated gains realized fiscal significant X/XX/XX. last

a when do portion and this consider create pay prudent this a way deemed shareholders. again declare of believe maintain retain common distribution may the decision the required to a we for portfolio made this doing the reinvestment to and of and we And growth large to capital tax we additional And gains, these because capital we we gains.

look still buyout opportunities. the to we on even both which continues where are The one are portions companies new Quickly equity new as the turning operate and and environment we where the and competitive are in other to outlook be are today good activity our we focused pickup evaluating are we to extremely number is news as is though forward, of we that a creative acquisition I we're buying income made and investment June in assets. potential seeing a mentioned

grows manage So distributions and as portfolio and we to and pay additional the matures continuing realize able gains. semi-annual exits supplemental anticipate we're the to capital

is it ability are supplemental Board there capital distributions, Directors additional their to with make will course timing that further distributions this and these well of as we as gains. deemed our amount Of of evaluate

Now the our at of return CFO, on temporary leave a end Julia month. Ryan family we'll and is this

little So her our more detail quick of overview a I'm sub financial going a to actually performance. of and for gave

million we net June ended this with operating investment $X.XX an $X.XX quarter results, investment $X.X a For income compared NII, prior the income quarter up from NII the or as of million in share $X.X of of the net quarter last to quarter. per

of increased Interest the timing success about and a dividends while stable income. the fee income income $X.X variable nature million remains which of other by function is and

was an unrealized the by $X.X new from in well associated decreased the decrease as increase quarter, we on current million credits was incentive that advisor quarter by as gains-based which the the our appreciation during origination which with capital fees driven our recognized a due investment. approximately expenses in primarily net in Our to received

an advisor, in our also the net by increase. offset further to by partially the increase income income-based were investment factors driven was in which incentive fee increase an These

the capital up So the prior gains-based and per income common again the when investment this in investment incentive current to the weighted $X.XX $X.XX net is exclude accrual net was share income adjusted fee share adjusting from average per quarter. quarter in

and a net XX, income fee capital of not realized does of useful income We earlier. representative noted or realized a activity with include that we a adjusted exits is which gain net Also indicator operations on capital $XXX,XXX, the gains-based unrealized that incentive result recognize ended any during believe is of is the associated incentive of a continue investment as investments to which investment quarter exclusive investment fee. gains-based primarily we approximately June net

investment looking as which Quickly disbursements items, is at assets to as of investments some to result balance sheet to million, increased compares XX. existing of at the XX portfolio March $XXX June exceeded exits. and and which million total This $XXX repayments new companies income a about

approximately coverage with available million strong $XXX very our with ratio credit XXX%. remains of liquidity under facility over an Our asset

million depreciation net $XXX share as result total of from of assets gains. or is $XX.XX primarily small about unrealized $X.XX actually XX, per XX June of realized net a our March as which And down

in terms and net of as gains of net and realized $X and investment about distributions total the June share. million on XX Sheet undistributed In basis common $X.XX or income a over accruals book Balance aggregate per per

is due million amount distribution, not of as for this declared that also million paid. $XX we of roughly accounting which incentive and net yet which is deemed to the is be $XX X/XX/XX the fee gains-based So accrual, capital

fee periods, would So in distribution be of even incentive paid. accrual available shareholders be capital work share this gains-based $X.XX for if to future amount the entire per to

declared in August additional XXXX share of be and of for So September. previously mind, common monthly per that paid $X.XX share distributions to as one-time and July, July, of distribution announced with that of September Directors and common Board $X.XX in in supplemental our

roughly does So distributions per assuming the including about which not current share $XX.XX. supplemental one-time, would per rate $X an on $X.XX monthly is which the and price share yield annual in at closing is have we annual the an total X.X% $X.XX distribution common of yesterday's rate, of a $X.XX of distributions, the

going to wrap David to David? calls. over back turn I'm it to up that, with our So

David Gladstone

XX, The Dave, with two to that investment, very for team gains these finish. information exits and some the to is add good. year a bringing filed at new in of start March information great The everyone they the our new shareholders team buyout XXXX. has and good fiscal presents including realized reported XX-Q yesterday, throughout Good year, a the investment in on successes position fiscal continue net transactions up-to-date.

is potential to supplemental you income. an on and continue believe show your attractive for investment distributions seeking from to monthly Investment investment gains hopes return Team strong other continuous I a and distributions capital Gladstone and investors funds. our

for And still votes counting just annual as the meeting. note, a we're

So to shares. of vote want your to I all urge you

you'll You and can do (XXX) that number. by calling the need your XXX number XXX-XXXX control

says If spam. and who have any note your see the ridge. That you it your broad votes. that That's not phone, people counting a are don't on you is of

have let's and now our shareholder. analyst from questions So some

tell operator, Sarah, them how to would on come do and you it? So

Operator

Kyle of question from Jefferies. [Operator Instructions] line first comes Our Joseph with the

is now open. line Your

Kyle Joseph

us It Well, like quarter. about I good there? in Good hoping briefly, guys, recoveries as more outlook some to was and through could in you reductions talk as well a you looked for were on congratulations additions, your the parts Hey. gone of terms in give us queue credit moving non-accruals. performance. Can but some morning, non-accruals color there I've

Nicole Schaltenbrand

previously Hi. a acting four converted equity. movements that Interim Julia and the This we to runoff portion is Nicole many investment we that CFO, with on not There working had the so as were leave. debt non-accrual, on on while Schaltenbrand, in am investments I as is B-Dry debt remained. restructure non-accrual were that was

non-accrual. So it's no longer a listed as

David Gladstone

actually B-Dry, next nothing new further to over we and a off months. and working we to non-accrual Yes. of said Kyle, on David come there's exited are number here. of of Nicole add couple what Yes, probably going those are the

about So on really in obviously as on we'll times have down We've up I feel good valuations I got the is early, either mentioned some multiple. portfolio depending just where or small quarter-to-quarter, EBITDA today. movements

told, in portfolio. all-in-all shape on I the great think So we're

Nicole Schaltenbrand

quarter as items as No not… Yes. this new added far

Kyle Joseph

talking cost everything went down said went was But you that. I and fair Okay. value up. how about explains non-accruals

on but Thank obviously you a that. have then helpful? me, us give that update BDC you out one specifically environments strategy for So guys appreciate most would there, And to your if could competitive you. be an compared last unique

David Gladstone

be always if challenging quarter but different June than to the of to I not been it that mentioned, months. the is to nine – continues the great. or any say. I But as one for We last investment end I you difficult did want the it's at would call six new it's yes, make which So is,

what's us either diligence. stage for or we're called working We've in got even the number a are that due fact intent on of letter in that

are tuned. going and stay a be on very good about we're cap mean, perspective. again, exits, gains could which I of where working couple a also feel where I So we from we're and beneficial

I year. So we're think in good a in pretty all, year all this

Kyle Joseph

very my Thanks answering questions. much Great. for

David Gladstone

Kyle. Thanks

Operator

Thank you.

Schlein line Our with from Ladenburg. question the next of comes Mickey

is line Your now open

Mickey Schlein

value some and we B-Dry and their capturing converting walk Good go and in to through common preferred could us just back those outlook morning. Dave, shares? the for strategy you your could debt for

David Gladstone

Yes.

Mickey we longer then entity we we've and converted that company, exited So own we B-Dry. the no it – so don't

Mickey Schlein

value? Okay. And did near you fair exit the

David Gladstone

No.

Mickey Schlein

ask see All the you sharply. right. J.R. about for wrote extended you I shares then that them facility outlook Hobbs. preferred like and I a to your credit pretty down also

an the and update there outlook what's going on please? Just on

David Gladstone

they capital. We acquisition made so on, contracting Yes, stress been HVAC growing back And the year. some actually business might are very as an contracting puts add-on they've the that and working business, in you in to that earlier business, dramatically. imagine,

to of couple reported business, It's of grow. that stable terms of a So not very very a business very, in the fundamentals continuing profitability. We they're properly frankly were from the doing had the now well. very and contracts

I frankly. So again, aggressive blip a a would – great what in by call we growth fairly driven had part temporary

doing they're in all-in-all capital. working a job So great

needed provide and capital we able that. to some working incremental Just were

Mickey Schlein

the of valuation? of value decline the is some the the preferred the So from just waterfall in

David Gladstone

exactly. Yes,

Mickey Schlein

$X.X dividend part know from Okay. was what $X.X was was income, from? million dividend affiliates. And of there the income, Jackrabbit million but I

Nicole Schaltenbrand

our was well Jackrabbit as of with up Brunswick it the made of So income. rest as dividend

was investment pay dividend up to sizeable able a million. us this to fairly quarter, that So making $X.X

Mickey Schlein

Brunswick so the there specific at drove Was dividend? event something that

David Gladstone

dividend One that have if where to a you to it’s and investments, what's have they about all we a tried things called their are especially one to couple have with. and is and distribution all our No, got income keep work this for with the tax then talk make earnings shareholders. able time those to I we able they are profits in of course to dividend purposes, mind, that of actually

fees So with portfolio our course, those companies. that's that the and we one other generate item

be company fee, portfolio and So we either what BDCs able as from company don't we that a to is have it each fee dividend pick do likewise but other paid cash portfolio pay we you're we're to would the through that partial that is get one and which – which of us taught distribution in do of before part income, a work is not exit fee their can way. time-to-time, times generate our an report income course non-cash, companies. When exit we of or exit from

other than very, dividend. a very They pay unusual do nothing the So doing to well. had company's ability the

And were we that and in quarter. so able we try work it we our to companies overall that part with of as portfolio a and income bring strategy our to manage

Mickey Schlein

Thanks understand. Dave. I that for

Is Just a couple the the than Virginia on there more deemed potential accrual? distribution the questions. a be, much taxes to for $X million larger

Nicole Schaltenbrand

do would larger be larger – we anticipate than it not that that No, any amount.

Mickey Schlein

I some… Dave, know you made And Okay.

Nicole Schaltenbrand

have within do we that hope to Now year. fiscal resolved this

Mickey Schlein

Okay.

Nicole Schaltenbrand

update further on with So our that provide we'll next filing. a

Mickey Schlein

them paid right, so made the anything yet. All you've but you haven't accrual,

Nicole Schaltenbrand

correct. That's

Mickey Schlein

pretty remarks you year you about in the fiscal Can in the first just we distributions quarters and paid first and supplementals, was review supplemental right. and Dave, that declared prepared you've it I talked All lastly, quarters. the but again? your in year Last second this quick. them know third And the

on position, declared the in expect do based income to near-term? taxable be So more dividends special your you

David Gladstone

as So Board past this The supplemental, do which be would June similarly this was hope year. June under, we the addresses do one if paid we've methodology declared course it's December. a December. can another anticipate of and we year, basically we And the in is and we're did year and one this of we in in currently twice in done our it that would

or will it the So deemed issue and that call - of amount the was to difference That a the if anticipated other that was we you actually based this $X.XX was be incremental paid there there in distribute declared from September. want on being was distribution. leftover, to only able kind

June like I one-time to going the obviously paid that's in and December. at really But and we to it a is $X.XX to And on December we to in up June So refer basis a we'd that were to $X.XX this and and December. hopefully per, deemed to a this June year be that that likewise continue the is is the I semi-annual distribution. truly as mentioned, were relative supplementals program one able step last

Mickey Schlein

I really That's you. my appreciate helpful. questions. are understand. Those Thank all I your time.

David Gladstone

Okay. Thanks.

Operator

Thank you.

shareholder. of line the Faron], [Mark is from comes question he a next Our

open. line Your is now

Unidentified Analyst

you of kind consider it Thank of there distribution, the ending congratulate a I with and one you just Good retirement, stuff. morning, distribution, on have savings the planned repercussions any of future, was chance a lot I and shareholders that the the the you up that deemed and quarter. wondering gentlemen, And in if question a just XX% ladies. a straight if to on deemed would XX% wanted was going distribution? a tax do XXXXs and and for in great deemed XXX-Ts all about other with to investors maybe individual the I you. on

David Gladstone

all the think obviously and the is the interest in continue time context them, for them what company distribution opportunity reinvestment we take we'll if remarks ability mentioned a best evaluate prepared in believe as to any we my evaluate sensible in deemed shareholders, in recycle way grow. gains value to cap the in as in or and the as we for We we capital is of an of I have

too diluted shareholders. by having an you about equity benefits it. to are could doing there retaining offering. So don't much it One, have It to think and equity potentially be

consideration our So time. always and percentage amount at Board by consideration be it's will and the management the under a and the

point. fast are policy this to hard certainly at we and not any going set So

Unidentified Analyst

for the to fantastic individual next the maybe some could clarify and that announcement all in quarter, reinvest with One problem out to it guys. that ability some work, Board That the and you on sounds just for might again it year, great. for fantastic Investor that once all and that to thank type I shareholders months hard and the be all into and again, thanks few those is just XXXXs consideration be But introduced capture transparency that great. Relations the capital straightened of investors. gets understand would when the XXX-Ts wanted the

David Gladstone

Thanks.

Operator

further I lines call time. at you. remarks. Thank no back this to David would closing to are questions Mr. turn There now for Gladstone the the phone like on

David Gladstone

to and all mentioned Thank All for of on calling call. in XXX-T you the everybody right. calling Thank to working on what make are by in you are as for last a this is. person phone, all and we trying end sure understands

Operator

conclude and Ladies you today's gentlemen, program. for conference. thank does in This participating today's

Everyone all have disconnect. You great a day. may

David Gladstone	Chairman and Chief Executive Officer
Michael LiCalsi	General Counsel and Secretary
David Dullum	President
Nicole Schaltenbrand	Interim Chief Financial Officer
Kyle Joseph	Jefferies LLC
Mickey Schlein	Ladenburg Thalmann Financial Services, Inc.

Gladstone Investment (GAIN) 1 Aug 192019 Q1 Earnings call transcript