GAIN - Earnings call transcript Q2 2025 | Gladstone Investment Corporation

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Operator

Greetings. Welcome to Gladstone Investment Corporation Second Quarter Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce David Gladstone, Chief Executive Officer. Thank you, Mr. begin. may you Gladstone,

David Gladstone

earnings you very and is quarter this XXXX XX, year thank analysts shareholders of our or of Gladstone, Gladstone ending chance XXXX doing to what get with September on going started, you Investment, is ends call we're to you Mike? our going. -- we're do, much. turn about Sherry, for David tell talk where and do This Chairman But over Chief I'm else Counsel to what fiscal it and conference and Okay, the Okay. before second we

from hear Let's Michael.

Michael LiCalsi

forward-looking morning, XXXX involve uncertainties and include other and reasonable. may forward-looking we certain XXXX, our factors Today's Exchange and Act be though to Securities which These Securities of Act plans, the our statements Good the regarding everybody. believe including current risks statements based call on they're those on performance. future

factors future and risk SEC. materially on actual documents may all the Forms results factors Now or our filed with forward-looking we including other be these XX-K XX-Q, expressed by results our to cause statements, many any various listed from the different implied

also note, notification to sign results. or gladstoneinvestment.com, future or future visit a our required performance SEC's events find and publicly at law. the otherwise, our on You gladstoneinvestment.com past revise information, for result these any is or we e-mail website, new update Please information, statements, as up which Investors of as or forward-looking our page of you guarantee all not except market can ask We undertake of whether documents no to the website, www.sec.gov service. a website obligation these of by

at review press is on XX, our Gladstone an XX-Q, comps that through find you on for we gladstone overview simply XXXX, so is release also issued comp of on our now Gladstone can Companies, Form and Facebook, Twitter, information. Today's the both is detailed yesterday X. handle ask the there call X which us results You and keyword, September more

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

Dave Dullum

very you to morning. Welcome our analysts. thank Mike, good shareholders much, and and all

fiscal For 'XX bit assets of adjusted pleased down report team second ended fiscal X/XX produce $XXX positive 'XX, on 'XX NII year consistent in per but $X.XX quarter-over-quarter quarter that quarter the and with quarter, we'll that second prior We is which results. and the minute. share explain to continued of the of to a has this GAIN from a total million, I'm of

active will investing I while. continue this a are in and period, an believe extremely for We

to have diligence opportunities. of been review investment on number a We continue and due and new conduct significant

to At was various million companies, the Nocturne $XX.X Luxury within which we've portfolio secured in companies. our first an help of invested existing add-on acquisition a lien Villas. time, fund activities managing for X debt We the been about of existing form our XX same portfolio

have I've confidence we the these future a equity As this follows us its over belief to strong in will opportunity gains. in future of the where year, add-on value companies enhancing in calls, few activities other team, build decrease opportunities management allow add-on investment, for past the companies our have portfolio significant a some and at our other mentioned where of in prior

around very monthly shareholders a meaningful a of had $X.XX company, our capital distribution basis. maintained million. generated also Nth realized portfolio $X.XX or share we on quarter, $XX.X Degree, we an per This at share of where successful exit annual We per our gains

share quarter distribution $X.XX of supplemental that in also was per declared a during paid October. We the

fund. our distributions shareholders ability from on our portion meaningful buyout Now model this the gains supplemental with to capital further reward distribution buyout focused large realized equity reinforcing exits, our strategy of our supplemental the result generated of of direct is our a a and

values will the be emphasize to It rewarding shareholders. It is which And to supplemental shareholders. to from debt will the our and the extremely companies benefit assets we as important and intent here, shareholders portfolio our new investing dividends, and exits gains support the in on of of that of our equity for sacrificing harvest to strive timing that gains level remains we to continues portfolio meaningful exit. mature to income our always realized though, our continue monthly increase, capital the distributions is produce constructively without with these balance important grow

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

and for portfolio add-on companies We to mentioned, if continue new assets our to support while the actively I financing growing as acquisitions, interim providing our arises, need buyouts.

we and market. in forward, in opportunities we for deals look as years, new I coming are momentum about the be are over where but we are. there And increase looking of seeing number obviously, acquisitions very as uncertainties to feel we to many there an mentioned, seems growing good and next Now new

in a M&A liquidity which makes very significant is competitive the on for pressure upward with There environment market, valuations.

companies will debt our our believe a equity, to through We and aggressively by acquire financial we maintaining and basis current with upside principles capital being income of appreciation. model a and compete value investing that have investor on new a fit generating of combination

with will diligence of that our we analysis are With new and on near to very portfolio the in we number doing adding of buyouts, term. be current assets the new I'm companies level encouraged our due

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

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

turn it that, on the with have to detail and more I'd on financial over results. her CFO, our elaborate Easton, Rachel? So to Rachel like

Rachael Easton

morning. and good Thank you, Dave,

quarter primarily operating was fiscal of gains due in increase were Looking million and incentive unrealized in a year expenses quarter. $X.X up to of from for net prior for in at income the losses $X.X the million in 'XX capital impact quarter. quarter million the quarter. second and of GAAP. compared This million, of to during in million, U.S. net performance investment quarter quarter accrued required generated investment $XX.X prior million under $XX.X the the total we to million from our the gains-based increase the $XX.X prior as realized up $XX.X in the income fees Net resulted due This $X.X

Adjusted share $X.X in income, up million remaining which a or but net per net any fees or of share, accrued is or investment investment $X.XX from the incentive income was per gains-based $X.XX on the quarter. $X.X slightly capital consistent per basis prior loss quarter share exclusive for million

credit the operations. adjusted are to a XXXX, We are is quarter investment status. continue net of Consistent representative September and concerns. continue XX, prior X at on nonaccrual portfolio income with useful no companies believe have indicator we that there our to ongoing Overall, portfolio-wide that

closely working to these continue possible. get We on status back when accrual with companies

portfolio We on partially performance unrealized the excluding continue and higher exit been offset to across a back unrealized multiples the our nonaccrual them. are other improvement they portfolio continue which up performance portfolio, that in were was see the million we the profit, with was and This has some of of companies, portfolio of reversal the valuation across appreciation a companies. $X.X by aggregate decreased appreciation number time at Valuations at at to closely increased to to event by driven as related degree. X companies in for the particular generating work

a per the share which distribution of primarily share $XX.XX by paid compared Our supplemental NAV The prior the decrease per the declared was end $X.XX of of share driven common per shareholders quarter. share to to $X.XX per during distributions October. at decreased was in $XX.XX to quarter,

long-term NAV share investments on unrealized million reversal Our capital credit unrealized investments With savings $X.XX elements rate to on And per share portfolio we key have we $X.XX yesterday's and fixed of unrealized and unrealized NAV place. by $XXX $X.XX million of exit, and $XXX was appreciation that per available of grow share had on increases of previously liquidity of note maintaining the on success. was impacted realized also of our the depreciation believe depreciation per which net our across portfolio are facility. approximately by income. of and depreciation issuances, per offset investment $X.XX our partially net in as amounts mentioned. comprised We of public were experienced These to release, share X of support our due that flexibility as share per of in $X.XX

remained distribution, low an coverage to strong. per the September, book on $X.XX to remains we the with distributable September to distribution million XXX.X% ratio portion providing gains Consistent which asset and as earnings monthly the per exits. our $X.XX relatively for an remains quarters, October, run future our of share share in as per share. of share paid shareholders $X.XX recognize leverage funding supplemental or plenty started we fiscal with consistent declared $XX $X.XX We at with future will per coverage. supplemental we prior XX capital required a spillover of realized in Overall, In mentioned, rate cushion at us distributions year was look XXX% continue equity and of annual

year distribution fiscal monthly $X.XX $X.XX run the in per Using in so distributions per supplemental XXXX. rate of year and per share share paid far

price yield of would part fiscal closing covers using of about today's year call. estimated yesterday's $XX.XX. aggregate Our This XX% distributions my

to with David day past last X last with team to to Financial the introduce be I call Investment also as I call been personal month, earnings of as like Director pursue Gladstone Taylor David mention the turning announced moment like Controller Reporting. everyone a work the for the and up, Before back Investment. Gladstone and a with and will for to I'm take years who my of the enrolled I've Ritchie this has to call would to past X my I'd last years, the done Dave, over wrap that proud on today change.

all from transition. believe seamless the a We him have CFO excited very to will role step what into be are we

to to now over up. you, it I'll wrap hand it David

David Gladstone

something March an in Berkshire think fiscal quarter you of asked our that company? would to do ends him, investment but variable times XX. have day? rather income, everybody once call more team to believe a we the Or Hathaway date. years in as you, at you you you're the to have it, you yesterday dividend that Gladstone successes have ending and a like the quarter in just year through results rest about The and accounting September continue XX-Q XX-Q we solid given great Thank right. us for position has should been This and but team wonderful. filed SEC the go, information Rachel. at strong -- causes in just replaced we you've the like bring XX, really good that to this the reported We XXXX see up if over by every is, and it to don't has for come investment All they is pays you people a in would an forever the interview attractive of read

He it selected get He always invested out in. of money he's at that a one. that to likes the most company

So who a we been supplemental investment believe very is doing monthly continuous Investment that our of then goes Team come we've X portfolio hopes continue seeking distributions. that is capital [ those And in attractive to one, gains fund. or ] show We for on forever. meet the sold. it strong investments in companies your to distributions returns from public this you Gladstone

Now and be come ask would if good. on, for questions. stop let's you'll here that Sherry,

Operator

Thalmann. [Operator Instructions] Our is Ladenburg with from Schleien first question Mickey

Mickey Schleien

Can than credits couple I've assistants year And that what's manager noticed much running for the last have that give portfolio for been fiscal what's line a of from the decline? insight that quarterly managerial Dave, their lower item? outlook company causing year. external us this some into fee questions you the today.

David Gladstone

Rachael?

Rachael Easton

the looking to quarter. correlated that's So to activity at going the deal takes be when during place that --

to a can bit I that So little quieter challenging an couple perspective. have investment you of the a project at out. it's look bit quarters little think been from last But

bit So that's lower. why little a it's

Dave Dullum

anything we as just There's anything, do timing the out. as pointed in whatever, not as a or fundamental much change Rachael

Mickey Schleien

more I follow-up that than understand that its X not track? My company you more done question selling has like which Can time understand. have I enough over of whatever And years, to I if nonaccrual address you back also on your seem which when due go just of what to about on issues it? update do us has than would relates Yes, been on ongoing was expect do accrual? that thought are. But some it's X for Hobbs, answer. assistance. to it on years possible, you And the get back thought to sort to

Dave Dullum

to would think indeed, as -- mentioned the the that things. your think we companies to in question her be One, alluded X in now profitable, think So yes, actually excited of there that both script, months senior calls, the is the management about Rachel the is actually made I we And I Hobbs. change answer mentioned those I in I've but also company, part he or that's is so. CEO we're the really has the to team about and team to and new relatively now CFO, -- we've actually prior now, which been X X

a got really That's management first we've So thing. team. the solid

and the that not some homes, The always couple and priced, problem years off perspective, mind now back well expanding they've bit initially business well we're of they contract business of projects. with is industrial a the commercial going is very where that into back very type been actually be not single-family to truthfully, long-term From either occurred managed. got keeping track multifamily homes, the in perfectly are nature contractors who general building it do contracting honest, a

recognizing And completion we they so basis done with phase. a percentage accounting their that have most up is in of that and would as -- that that jobs what terminology of -- that, of in a job on called that end result

be -- lower start So go a recognizing margin, to they along, grasp year, they finally sticking their a This level could plus truthful frankly, manage a also, job allowed much only also some two, not, actually right? over to jobs that is in of it then it. going we that recoup it actually taking higher a fade expenses ] of go of for, a taking eliminate and and have some not where one. for and company to That with to to being potentially a So on or much got Number level jobs of as job revenue. million $XXX that able reliability project pricing being management revenues, able property [ were business reduce over getting they proper and forward. certain aspect it, able number we're at down higher a the margin would believe these slightly on are

currently. all starting the system that's So to through come

we and coming it be, with to My get it's that's accrual. some start would it, we've could helped probably So business the kind the work therefore, able have accrual sometime, it status shortly is to being of X what that hopefully, just next and it at. back how done, not of hope how within back the we we maybe level months, on occur frankly, but not that, bring might after of all on that,

business, So also, support any again, us, is and question, it's a thing. team, good long answer now or to additional your a good management which money but not requiring it's a frankly, cash good, solid making from

Mickey Schleien

are are And That's service to you've of yet? there to they good really generating at Dave. in profitability flow this terms cash the mentioned, debt Or not the hear, point? we enough

Dave Dullum

No.

right I perspective. business cash, to but the working some it's to because back from As [ and going obviously on again frame, they're now, back and and mentioned, forward they flowing probably a looking it's accrual into ] be capital getting X-, X-month time phase, a started starting generating

Mickey Schleien

Those Rachel, questions morning. your good this are And my on luck endeavors. future for

David Gladstone

Can who's have we up -- Bryce? next,

Operator

question B. is Our Riley Securities. Rowe Bryce from with next

Bryce Rowe

that certainly of around could that about size the or that that comment. pipeline but know give Congrats us in stuff. before. little terms it of you there. know and to start, you -- of can, heard you wanted active an talk exciting if for comment? maybe describe to opportunity comment up opportunities this if Taylor. kind like rightsize Rachel Dave, don't a don't I detail out be you about I to us And you It's helpful kind I've to the made I extremely with Can would if

Dave Dullum

I I'm very it's say going all hard that forward, I you that adjective only obviously I and probably word, don't not but seriously, -- to at no, an did use No, again, are running going But anything we that use shouldn't tell say, we levels. right? here can that to want

terms and or One she my morning. alongside on. next couple very next, me a of sitting in here of frankly, X the of within to I this active know, partners this don't doing working we're is deals that Director on are in to deals senior actually hopefully of new close that going month is call stuff Managing that, She

also sudden, we're high a the way, valuation. It businesses, all think to up mentioned just I good few we've seeing leading been as that is like the say, I on, that we pretty are pretty we've a by truly number indications months I of the which, over in high are seeing that not that interest on of last, a would putting actually it there LOIs valuations of some of -- also only number deals

So X be. turns of because than we some level the to EBITDA lost were opportunities we've next going is lower maybe where X,

of -- really overall time. that's stuff. it's not stuff really activity. looking that's It's a So We're positive just lot good, at wasting high-quality over

is So we're frankly, the higher. also I companies The of And well. the as is we've now -- higher. and and say work looking is the would the to part, historically a than higher bid winning able bit on are think size done quantity I third and and also quality at through the

are. know, due extremely do of mentioned doing I'm just about why we're we to we I obviously, that. And slogging. that's diligence. we And are the where that, careful And got keep course, very as you in So we enthusiastic how

a right the portfolio. activity the So lot within now on and team that's going there's why of overall

Bryce Rowe

closer you same more than you'd that into transactions you mean, line the to a made from the that what EBITDA And perspective, comment issue? little price are handicap getting being deals Dave, multiple gives confidence like -- about that how I higher some running do you are the finish a

Dave Dullum

getting with line. -- the of to the works, process finish if our Yes, let me way you only close because define

cut, would solidifies sort We after One we've X what a much there if pretty be when level, generally to we think what to putting would we some together we're then we we're that an we're what willing we to of levels. the That willing moving pay. of do. intent, So are do what which et right? we team, the would you letter an next we of cetera, worthy know, first call then made management done work. now do that, indication call meet go out us leads of and is to interest, then which For for put this we to as us, means say opportunity,

our to if is the That LOI has that case, get approved by back. And committee. investment then that we submit

So to point, in don't to that's finish that, relatively that a get always when at done. have that's the the high in get selected. companies right? really close to us work, it we that we frankly, now, we We we're a getting of due get we If a degree woodwork the of that really of it's of number confidence with we're line, selected then, kind and unless of probably going we fits diligence generally to do. up are we stage do So that find don't something so out terms deal really and going right that preliminary think finalizing comes in our

high we're I to a category, the here say into I'd months. those going we put confidence why that's in reasonably next And that closed would that get degree of number of have

that around you, the table than hit if any specific I got But can me specific. probably I all more folks I be sitting would the if more I think but don't really that. that helps know in don't So got head I've

Bryce Rowe

funding looking to facility got you by credit we in Dave. context, room weigh maybe do relative market this the kind mean, you've for deals. the How debt And the of of point? about or at obviously, fine, as equity ATM unsecured That's at plenty kind raising another new raise? of that think I that on

Dave Dullum

that. turn a have I'd great to question. it I'll Rachael, Yes, at looking we're something, obviously, that's It's like her it. doing But to address over

Rachael Easton

absolutely. Yes,

place when It's conservative it's and to historically and the sheet, flexibility be that the -- I has the team we in opportunities the for available right? so a kept need funding. have think nimble balance this very reason, kind we liquidity have of

capacity where we is reminded we and So into be available large obviously, we -- the utilizing our facility $XX quarter, to last new not credit have excuse that X then the kicked quarters me, program, on we ago, tapped million off consider yet. And very our we ATM something have important.

might other So of to at be sense the lever fund term meaningful we very as And whether future. of think holistically kind I consider issuances -- capital we pipeline. in of and within to open what mechanism. or to makes well, it out all also, But we raising that a debt remain be future further that near into look we in the our order kind are the potential the

Dave Dullum

we certainly, more way we growing, access to in NAV. we are as if capital might, and to, trading I a us. for likelihood need go we above good likewise, hopefully the we to is and is there's where position stock another And a need will is a think as thing obviously, the positive continue long-term which briefly we to, ATM add market, if permanent that

then feel credit have. point. doing, a it that Obviously, are around so We capital where to looking of about yes, and credit. on new our today capital we're long-term we think, for raise line with we of we get do we forth. pay So line reasonably use working ability deals to credit including of and down let's capital okay, use currently line we that good permanent that new the go and deal, at the need And raise the so we'll a that then as and we

certainly had conversations with bankers the with that. about and good we So feel others, we've pretty

Bryce Rowe

the quarter. dividend X was assume that in detail Any company. just portfolio one, questions that? I around housekeeping. kind more income me, Two of for Number the

Rachael Easton

additional the They dividend portfolio That's pay be some us Really position in X able detail. were to company. correct. to Yes. It income. was no just

but and little quarter-over-quarter company So project of as you you out, a there. kind challenging know, that is to X volatile be have bit can

Bryce Rowe

portfolio, that quarter. does the yield across yield the do -- a debt debt investments lot Certainly, rate? for really your When are far that the rate of compression haven't the seen space. seen interest reset We've in earnings steady those the so with then season. floating was And when

Rachael Easton

XXX% variable rate debt. our of So portfolio is

ins kind in that So some they're outs and actually of -- there's number.

so consistent quarter-over-quarter, in remains it just did was the the by while there. obviously, far decreasing offset changes generally see of It we So portfolio. impact within

So yield specifically, Nth quarter, had little lower the Degree, a exit than it during just total a was that the the bit average.

removing offsetting kind by So increase. it was of an that,

Dave Dullum

invest. the and relative want you. have of be total that about because we deals by don't that remember, we may we to we've thinking we to about benefited we sulfur certainly being in have what deals a total feel get and have the much debt, floors I but have about even And way may where we this extent Bryce, about to also new too floors means We dollar though the to. we to ] in that and carefully equity achieve both this and our want past we too which we've we guess on we level don't that yield strive have issue investment, have compression think look some at we done do very where the the When is. the past obviously, the -- up [ to And dollars in talked it wrong the way, floating that, which the strong this of think of the I yield I about

the so the that pieces that the will assets either we we floor can on we're So yield debt that set putting on. blend around

I think shape. agree feel we're pretty that? you Would in decent yes, So with we like

Rachael Easton

Yes.

XX% our And so in the overall, weighted basis portfolio a in place. about for reference to average floors, in at what is looking on discussing Dave's it's debt

to the we'll going minimum to. be ever that's So get

Operator

next Hewitt Matthew is with Jefferies. from Our question

Unknown Analyst

up question the First was Q, about is in the I like but weighted it the lien revenue first on quarter-on-quarter. X% of X%, portfolio noticed then decreased average your looks EBITDA

that curious So sort efficiency was that I'm portfolio? portfolio about was Nth cost or Or in the Or there just of movement. mix? mostly Degree some

Rachael Easton

So I valued revenue to a just a that perspective, portfolio revenue going the think be from that's being for are companies using multiple.

a portfolio was that's in kind good part amount portfolio performance. as the it look only we fair whole. as up When So impacted we of pretty had performance at the small quarter, value across that this a a of

decreased So then And a then is in sort performance, whether was revenue. that you'll of see a increasing that that EBITDA of handful companies or the by range. that EBITDA offset saw

multiple, decrease company is this using a the a saw So revenue just quarter.

Unknown Analyst

And would I'm you just to some value XXX again of that value if the it's net then could in multipart, XXX baked through cost and into being noticed some fair puts walk depreciation the estimates unrealized percent went fair from yes, helpful. I portfolio of quarter. a of be on the kind the curious takes there's but conservatism quarter-on-quarter. or

Rachael Easton

very a $XX million So gain. value -- exit from a a is fair perspective, we the had realized of Nth which Degree, it's

carrying unrealized outsized have exit fairly realized. a appreciation was that that it been portfolio, until we was when our for So

Nth overall, share of unrealized at about across did portfolio per So say, value We any reversal $X.XX appreciation of was that's that that to the the appreciation the fair Overall, it percentage. when exited. portfolio really experience excluding when Degree aggregate. for I'd looking decrease in responsible unrealized you're related

going that, board kind the changes So your -- through across fair values excluding you of up. we then And did just asking the sorry, NAV to see again? were asking go

Unknown Analyst

unrealized then if -- puts net go was ahead. takes It think depreciation, sorry, on covered. could ask of the mostly which just Yes. I And I some and the you

David Gladstone

No. What's question? next your

Unknown Analyst

calling policy to are or impact or on the outcome worth your out, positive election negative? any you do experts, last portfolio they're at be high-level see is asking particular business The from not but this that point X businesses in

Dave Dullum

living it be been around issues look, quick And perhaps, only it's go extent. actually a would taking and looking a China our of to So and the experts We'll et are tariffs at things for obviously, down. again, one, go some settle products of produced something some up, we're Matthew, not obvious years, with time. The policy cetera. that either. things obviously, all we We've will down, see have number overseas, companies do

that number oriented a of a say we of of living environment we've with those already most One, things. in companies. for would a I years been somewhat companies Now tariff have those that couple of

of production Some some it would say have I X any take to But see and next other based don't guess, about now, that But can of where sometime, of honestly the the over major issue look I also any knowingly right months be obviously I them coming to at shifted say, so. -- that countries it. a of might United we'll next a it I as or you result I tell start of we'll on their as that changes works, hearing come States. them aware in back we're

Operator

We do Thalmann. with have from Mickey follow-up a Ladenburg

Mickey Schleien

Rachael, just anticipated based as lower incentive noise Is NII. pre-incentive there fee question. modeling sort expect? X I of was on to in we than explanation Just that your some would any fee Or the number? probably than lower income-based why The it's

Rachael Easton

call that Nothing to unusual There nothing in there. out. was

result just the it's I think of a calculation.

So impacted think reduce base. have your yes, out, of -- anything that and modeling. coming the I Yes, else asset can't would

Mickey Schleien

have dividend calculation? any that on impact the payable Does

Rachael Easton

No.

David Gladstone

Okay.

Next question.

Operator

Faron, no we to management. would got are further hand he's to like just questions investor. There I X it Actually, Mark time. at a private this off back

Unknown Attendee

clear-headed to taking hear wanted insights Michael investors. a a just have been investors a and thank care shout-out can guys really, all Dave advocate us, job I and to She's if Dave, just fantastic but me, individual for of and really for all big and years don't you us, do great know individual her nonsense service. her of Rachael you I no but

So very thank you much.

David Gladstone

with shareholder. a discussion? how Thank much for dividend. that owe you And do you for You paid that already him we being special

Unknown Attendee

again. over and Over

David Gladstone

this again you of you next Thank we'll saying say to end this for you now and all of on conference. quarter, see We'll for the goodbye That's move again quarter. to Okay. that.

Operator

will today's This you. conclude Thank conference.

this You may disconnect thank your at participation. time, you for and

Gladstone Investment (GAIN) 8 Nov 242025 Q2 Earnings call transcript