GAIN - Earnings call 3 2024 | Gladstone Investment Corporation

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Operator

Greetings, and welcome to the Gladstone Investment Corporation Third Quarter Earnings Call.

[Operator Instructions]

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David Gladstone. Mr. you, Thank begin. may Gladstone, you

David Gladstone

talking Thank you, is this beginning, this to a the XXXX. December That Gladstone, Chairman was be going David we're and quarter good year of ending third XX, and that Kate. about Gladstone is Investment,

for ends us. is that's And symbol on under the fiscal we conference of year months GAIN, earnings analysts and different then GAINZ stock these in All the capital common and a listed the in Our shareholders GAINS, that's of and couple notes. and GAIN call are all follow GAIN registered GAINL. for that NASDAQ there's and X

for an provide our buy can shareholders won't much today. you that calling be update So and always analysts talking you them in. to happy business to if well. We're you current environment. our provide wish as about view We thank those the of But

X past. now you Erich has view help from really we'll Erich. give the you our there's though here, Deputy General a our ball, hear Hellmold, what have And future. even don't And of understand goals crystal So the we'll current in Counsel, happened we

Erich Hellmold

in SEC. found website can implied at by at with our all the statements, website and our our documents good XX-K based future factors from Act and to Act expressed those are of to be Investors may risk our on forward-looking or www.sec.gov. may These Today's which everyone. under the uncertainties Many other future performance. any the Securities they statements our regarding and XX-Q, including reasonable. factors, actual plans, page though on involve Securities and call filed other risks of statements we materially you, different of or Thank be certain the forward-looking morning, and including even Forms XXXX include Exchange www.gladstoneinvestment.com we results all SEC's the current cause XXXX, believe factors forward-looking listed be these These results

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

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

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

to over Gladstone Dave President Dullum, it turn Investment. I'll of Now

Dave Dullum

morning, everyone. Erich, Thanks, and good

with We follows share which, quarter on year are and assets fiscal year per We happy third course, the total to 'XX, report for 'XX third results that quarter good fiscal on XX/XX/'XX ended and year fiscal NII of $X.XX which X first $XXX 'XX quarters GAIN of solid and produced previous of very of in of the ends March. adjusted million. this

quarter, details we new an those us from You'll fund Rachael results. we and making always goal objective. are our add-on our to existing acquisition in portfolio be and are again, doing investments companies. new one we obviously looking new And of and continues -- and deals, that In acquisitions, the $XX are helped activity to that, which our about regards when good around to did the this she describes learn more again, for CFO invest million, Easton,

businesses. value really these build business we know very is existing an in value-building itself we really doing team, our aspect to have companies to us where investment increase fundamental of of allows management because it its certain portfolio in belief a the continues However, our and to in allow companies important add-ons our process where us strong future it good the and to

our and is main in to we So that adding acquisitions continue go along. while new necessary pursuing as business, specific which obviously, we'll do certain as cases,

is the exit are our of to of continue We distributions meaningful have monthly gain of generated the in XXXX. we were and these buyout ability of to we for shareholders we for distribution large capital successful very a to of our shareholders per or during an a and about a paid gains, maintain distribution as portion on rewarding at we to from did course, realized pretty of per $XX.X the have equity this basis us $X is our an exits, one supplemental of $X.XX our which actually addition, and December on basis. continue We portfolio our $X.XX capital to in million. shareholders that Again, generated supplemental with buyout monthly share we for distributions aggregate of result strategy our is with and able important which obviously basis our the distributions strategy distribution monthly and meaningful the income annual also, companies on per November share exits share where to generate very realized

Our balance availability sheet position a strong on positive additional leverage low liquidity very credit very our and be to continues with with facility.

support both growing for financing So while add-on interim arises, our the if we portfolio assets will buyouts. new acquisitions, actively to companies, our continue need to providing

to past deal over testing somewhat the are months The been have the we up as the Turning X to call who so picking or as pairs the be outlook. sellers market. back holding flow, it,

we're et we they coming cetera. has were last the and backlog for our hear market back, taken opportunities somewhat like sources groups, deals the so the acquisition bankers And fairly last that are building. primary being were It opportunities months do slow and to acquisition new new merger seems from X of been of and the who year, investment or

bit meaning an situation coming significant is -- process. in result looks on the there's continue cetera. to does like that early event, down, in very possible maybe this perhaps somewhat to of few being are we a currently working challenged But be continue market, new competitive buyout course, time. regard, There phase be and we our the of any of all in it the et of deals, Now increase that in liquidity a a continue interest rates as new

going to we're aggressively compete acquisitions. while sensitive, we for So value new remain

summing and our state in quarter up of So believe we is the portfolio good. looking the very forward,

We and activity active level continued of prospects year. liquid an earnings sheet, have balance of buyout a strong over good and next the distributions and very

I'll to the So our Easton, and can CFO, of the turn financials more details it Rachael? over on Rachael give quarter. she

Rachael Easton

Thank good morning, you, and everyone.

operating made million the quarter investments as performance any interest resulting from to in debt the was receiving new as due to these increased from not of with as total associated in which by prior exit during income success higher our of income, fee quarter in $XX.X the 'XX, we was an fees primarily the was quarter. fiscal income third compared quarter, received at driven the up Looking million. of increase quarter. well dividend That prior investment year generated in $XX.X and fees This

Net net U.S. to in expenses primarily accrued This million. investment prior $XX.X costs. decrease increase realized due $XX as prior quarter. losses required quarter. gains-based in This is fees recognized fees decrease the of quarter. investment for large under $X.X XXXX, of borrowing fluctuation GAAP. resulted gains-based is of the decrease net the gains due was income the during offset accrued million million partially in incentive the loss net down primarily This by in and $XX.X was This in to XX, unrealized were of incentive million million the due quarter and impact capital to December as an $X.X This a from to capital prior compared a

or loss from quarter. $X.XX capital Adjusted quarter accrued share net investment gains per income million or million exclusive investment $X.XX income, $X.XX of in up net or share, for incentive that was per $X.X prior fees which based is $X.X any the

the We those when continue adjusted prior that ongoing working representative we status, on to will December operations. of income to status that portfolio possible. and with XXXX, on useful XX, companies Consistent net continue investment accrual get companies quarter to is continue X at indicator our we nonaccrual believe have a are back and with

long-term support grow to portfolio maintaining public and that success. we X are place. have our our rate in believe key and With note fixed issuances, of elements We have liquidity capacity credit our available flexibility release, of had And $XXX that announced to million million. $XXX capacity. as yesterday's as our amended we the we expanded and increasing yesterday, over capital facility, of And

all were cushion quarter, successful above as sales then December our ratio providing Overall, leverage plenty in continuing XX, XXX% NAV. coverage to relatively well raised an current to January our required and the the proceeds active ATM with at approximately during $XX $X.X XXX%, very ATM of be in asset we remains net program. coverage. stock raising net the low of We XXXX, with on in accretive being anticipate Additionally, million additional in program, as common proceeds million an

to of of the $XX.XX share per These per share end of decreased compared gains to were per share supplemental prior shareholders to and decrease net driven income. depreciation realized quarter, The for quarter per was share primarily investments during on distributions on investment decreases unrealized the in quarter. share $X.XX $XX.XX of investments NAV the by which per by $X share $X.XX common net paid $X.XX $X.XX offset to distributions. and related share partially per the at Our per of

our We annual started or with book share $X.XX prior an for year with per remain spillover run $X.XX distributable and of consistent month Consistent per million per $X.XX monthly rate distribution at remains share shareholders quarters, in strong. earnings to the $XX fiscal per share.

funding distribution share realized our as in we quarter, on the supplemental per XXXX, gains aggregate past dollar we December and this continue of supplemental portion look equity paid future November recognize distributions. assets. We During capital to an

supplemental of of call. total of covers $X.XX XXXX, share This far per monthly price distributions so yesterday's distribution aggregate run year at of estimated our using about share would $XX.XX. fiscal Using common in per year rate fiscal to and year a you, per share my XX% David. part yield $X.XX paid per distributions the in least Back today's or closing the $X.XX

David Gladstone

was the job point. very think a solid our call believe a and Securities The is realized We has exit position That for ends shareholders. XX-Q is Dave, through at you've the and I XX, Exchange yesterday activity just ending Rachael and year for much. December for to XX, these reported done great This and good the and including net an Erich, fiscal the a results everyone investment this filed Commission with to team good XXXX. good very, should investments continue fiscal in quarter, of a investors the Investment the team date. remainder with March Gladstone information associated year, gains. successes and add-on attractive the up very you bring quarter Thank great

team line. The hopes then you potential to continue, analysts the get talking distributions, shareholders you and monthly capital than return of some from questions And gains course, to strong got income. are a from distributions on rather let's supplemental the some and you that the it, and got show and keep about other

So you'll on if that'd manage operator, good. come and be that,

Operator

We will session. be question a from Schleien comes from Mickey question-and-answer Capital. now Instructions] conducting Our Ladenburg [Operator first

Mickey Schleien

portfolio you progressing of understand aware of the of margins are rest to from their wanted how I Dave, in portfolio? the that terms you your trends and We're all revenues consumer-facing companies But companies seeing outside any the are consumer. in headwinds. have

Dave Dullum

cetera, some which et of that materials, growth, decline, cost obviously Mike, those the are really. call pretty We're I to consistent, the and have across so our supply from up a industrial board, that's chain holding would not bit, in it, some slower, things you. not impacted of a Not eased talk little but end. say, companies, cases on seeing, truly nice held say to well side. pretty costs, I but would distribution

though, doing the even are you tends as little said, we seeing, But other. -- actually companies say, But frankly, would dramatic of all, I -- our generally, but some I go side a fairly moderate consumer products again, to way are one Interestingly, consumer say, right or all it's slow, in reasonably be a now. bit going slower stable. nothing well would pretty the

Mickey Schleien

sure and what we're That's seeing we're hear. good conducting of of I'm deal not that, terms your some future dividend for themselves may that's balance recaps but performing equity considering stronger help Is sheets. performers that something for of also optimize the or in what in funds you, seeing, part Dave, the hearing you're their private in case results near shareholders. order to with flow, of extract to companies better for is their some part which we're their doing for

Dave Dullum

it's And now, a Right, as then that were recaps one as of have right couple you in the we last we know, right. is if right of companies. shareholders for to the always it those with as company. we're you are you actually of But good especially now, not of a it like, teams reasons extract we the last way, good of because we something looking say, for years. Nothing it's all did a a able over and in stay way mentioned. did involved -- we way, done honestly particular, a for dividend and at One other the sort management one very company couple couple and those business year, one, that by some value meaningful

to And any really the it's management you our always companies, of time important know, it, with something that's portfolio as we've been sync done teams is which, in us.

really mentioned a been briefly, last then pulled, kind now. and commentary my a year, et now, of be there only the of weird So where then in other back to I general, of seem market to in right I necessarily. number have as they last is see they on that got don't cetera. slowly deals right fair market, were half coming seem the And

So good. I we're tell will well. curious we generally, again, you in outlook that paid, going a about those. values are and that that us. some at those not for looking bit makes of reasonably seeing pickup the that there reasonably of, looks at least compete and in that and ones usual, can't deal crazy -- compete to least are are to we're frankly, be going say Others, we as seems the But values and working in in with I'd we're flow. the at sense a being still

Mickey Schleien

of and and out? you you'd concerned know, your for In capital refinancing debt investments? interesting That's of at all some the than words, other as you're other Okay. last rates markets helpful. we to be go Dave. for question, liquid My investments taken some have them about could more are credit better-performing cheaper risk reopened these suppliers of offering

Dave Dullum

the Yes. No, think where can I actually and frankly, many, have we that's something obviously a and many at look really, would great in And happened the with that company over combination always right, looked I an that at question, circumstance. capital the one our of years. debt only of you is transaction. a the fact as know, say unusual and is equity,

would you from you point we're just capital can not I are sudden interest so all tighter, getting at down. the other be still that coming least coming is say with the gates So need what out, to as the bit flood this just the anything. availability regard. speak, The rates effective yield, spreads with where low opened, say comparison is still, to And pure companies of meaning might a rates. what is we're all so is that think, very in the debt relationship might environment to while you to speak, debt The as even then is competitive down. And aspect have important a seeing, right? the I portfolio probably be as at get

honestly, any portfolio not in challenges But now. our seeing companies I'm I'm Could not Sure. regard. that it So right happen? anything seeing for now, right

going overly so that any to we want taken be out may to situations not And I'm not concerned get we're out taken of. in

Operator

Our next Kyle Jefferies. Joseph question from from comes

Kyle Joseph

deals you're get and about flow? get really is we getting you're lot get now, Just market a right if thoughts Obviously, want and more it where talk of deal flow just of the sounds comfortable just you But about your more leverage on guys function done? it to deal a 'XX. Or have that dry do like taking into powder to leverage. what optimistic

Rachael Easton

get Kyle, market and a done. the think deals what we function of you said, what I

know, think, us you profile, peer keep I also new conservative compared but the it's So we a support potential flexibility group. And as to to that's pretty deal provide something BDC important, really leverage do greater is we the that to flow. believe

fund we test. the doesn't new So where and XXX% able on breaking need borrowings, we if it that have ability to to additional threaten to be want be in position a take deals, we to

Dave Dullum

in And and we're NAV, of going as of if call, able in we a briefly Yes. part ATM that. to fairly and to, being which is, program, just to successful of add the we're cushion what very rigorous put sort we've said, Kyle, the will, might Rachael course, on her you stick with And relative that. I had place to

So we're not there. going to do anything crazy

a some providing maintain it put risk doing the not some in side this Rachael and to But -- regard. deals the gives we that's us using ratio can hopefully, support be to and said, expectation, from us the that obviously to ability likewise forward we're to going that able start of especially the level looking leverage the coverage equity at of as newer

Kyle Joseph

one deal side environment just And equity, middle obviously, potential rates cuts up, lower follow-up with really the have private flow competition. you market go changed be higher essentially other but market pick of would as seen seen to this from even year? competitive And about then for -- me, has the on talking some the X we've expect essentially you to substantially

Dave Dullum

helped is to was I leverage the amount think, coming cost, the speak slow our but our ability what got perspective, end market, for going I only I of -- board, that can what may vision, least of but last seeing of year, near available. only would not the reflected, from down rates up, say being we're really from course, also the the across kind not be the of at and the

leverage a multiples change going sudden, of to little think not extent, getting that the back get I to that were, I of We're all goes deals where perhaps a really high it's, to will, EBITDA. done to be deals, bit, being you if point the overequitized, might we're to some again, those So seeing think, done. but

I fairly even careful. relative value to turns think I and as enterprise it's might And still we're think higher think, where deals seeing it's again, though or going there cautious worth. I the be some X X said, are than again, we be

If they I deals. debt. yet side of don't debt folks to we're the leverage any do to the than at those these the are values. are, do that has sense. little even there think gotten much where are willing higher I a if makes think equation Clearly, equity more point they transaction, to to higher And back bit per having

Operator

Our next from Securities. B. question from Bryce comes Riley Rowe

Bryce Rowe

the I wanted to facility. credit about upsized ask

guess, quarter, think took it's you up. amount obviously, changes, I I had, available some back the You've moved down last and

So maybe of there was kind a Could that level. detail that you of if be talk would process? Just you any bit the of add to some kind get process about to And did you a to facility? can helpful. banks there just higher --

Rachael Easton

absolutely. Yes,

last yes, regular yesterday that of beginning So really When which have the expanded up to facility we excited our announce million. amendment and went couple that towards announce the process. able were to and we of call, it a at October in million, quarter, closed down we during we through that process, result the $XXX was we weren't banks to just losing had of in taken a $XXX earnings credit our

on we this get working close the same time. X were to couldn't We the at expansion. Unfortunately,

brought Fifth in providing really increase the process. Third. amount. a up by important to million in to of well as And bank's $XXX the commitments believe to able the one pipeline flexibility -- other we were in we back additional to of flow we bringing contemplate future deal capacity get this as some were And is increase So able in bank, we also new facility we that

Bryce Rowe

And one Got Dave. it. maybe context, Rachael. That's then for Helpful helpful.

a existing pipeline company add-on add-on other you this Can the that? portfolio bit maybe You in And acquisitions. just opportunity other here your opportunities had companies then do for talk portfolio this about little to quarter. existing an for

Dave Dullum

Sure.

company So around, we've been management an industrial-based overall one, that with of additional to had the was level, all acquire had capacity, And from for distribution and bring the into Europe portfolio opportunity not years. business particular manufacturing it, capacity, to We've it parts both really only other somewhat integrated also of that product, Bryce, business. It's a the a very the we in and was et cetera. substantial in gave it a improving but few access us nicely country. size and really fairly which an

about the very So the give we order million in million you to $XX our company has significant revenue now, over $XX to would $XXX going million, really I back specifics, and come the I'm EBITDA. revenue in took that order along X, from And not well. increase but integration in say magnitude

we've the overall clearly value. So enhanced

transaction. I really So that feel about good

situation, way, particular a company speaking. by Without, leveraged highly relatively getting in the very that

really, So good really opportunity.

And be some that, end, gain like are seeing because per So handle and them are their some line to financing -- where we'll add-ons you. opportunities strong the some not really whether on require have or are from them continue yes, product our of portfolio of some sheets some continue. existing companies we makes it of some sense, own do smaller a additional se enough it balance what smaller

good to as so accretive particular I that another because, if value frankly, and adding to add yes, portfolio where well do sized investment again, do where acquisition, we're remarks, were companies and my company, you able an that. other help can as appreciate and fairly company that portfolio and they we made to And our go happy a it of well. keep know existing -- it's overall, in to in actually to continue as said we One we one to we back

answer yes, at to And so continue so opportunities. yes, we're going those short is, looking

Operator

question-and-answer comments. This turn David session. back the concludes closing like floor to our for I Gladstone over to would

David Gladstone

idea only I all, in back it's to business so this quarter, a are but like put assets probably you. no will years have a where thinking lot investing of don't was thank some the billion we're crystal that we we place you development -- we're good what's That ever, plan world have growing, anyway, ended for together presentation. that I is numbers and a really ball, to March over be money. strong and year best going think the I one, one a $X things our But put of Thank when XX, the people are and this end and of happen. that's guessing in But

Operator

This teleconference. today's concludes

disconnect you participation. Thank time. your may for lines You at your this

Gladstone Investment (GAIN) 7 Feb 242024 Q3 Earnings call transcript