Gladstone Investment Corporation Reports Financial Results for its Second Quarter Ended September 30, 2019
November 04 2019 - 4:05PM
Gladstone Investment Corporation (NASDAQ: GAIN) (the “Company”)
today announced earnings for its second quarter ended September 30,
2019. Please read the Company’s Quarterly Report on Form 10-Q filed
today with the U.S. Securities and Exchange Commission (the “SEC”),
which is available on the SEC’s website at www.sec.gov or the
investor relations section of the Company’s website at
www.gladstoneinvestment.com.
Summary Information: (dollars
in thousands, except per share data (unaudited)):
|
September 30,2019 |
|
June 30,2019 |
|
Change |
|
%Change |
|
For the quarter ended: |
|
|
|
|
|
|
|
|
Total investment income |
$ |
16,636 |
|
$ |
17,310 |
|
$ |
(674 |
) |
(3.9 |
)% |
Total expenses, net(A) |
10,053 |
|
8,455 |
|
1,598 |
|
18.9 |
|
Net investment income(A) |
6,583 |
|
8,855 |
|
(2,272 |
) |
(25.7 |
) |
Net realized gain |
21,144 |
|
533 |
|
20,611 |
|
NM |
|
Net depreciation |
(16,723 |
) |
(3,342 |
) |
(13,381 |
) |
400.4 |
|
Net increase in net assets resulting from operations(A) |
11,004 |
|
6,046 |
|
4,958 |
|
82.0 |
|
Net investment income per weighted-average common share(A) |
0.20 |
|
0.27 |
|
(0.07 |
) |
(25.9 |
) |
Adjusted net investment income per weighted-average common
share(B) |
0.23 |
|
0.25 |
|
(0.02 |
) |
(8.0 |
) |
Net increase in net assets resulting from operations per
weighted-average common share(A) |
0.34 |
|
0.18 |
|
0.16 |
|
88.9 |
|
Cash distribution per common share from net investment income |
0.16 |
|
0.20 |
|
(0.04 |
) |
(20.0 |
) |
Cash distribution per common share from realized gains(C) |
0.07 |
|
0.09 |
|
(0.02 |
) |
(22.2 |
) |
|
|
|
|
|
|
|
|
|
Weighted-average yield on interest-bearing investments |
15.0 |
|
13.1 |
|
1.9 |
|
14.5 |
|
Total dollars invested |
$ |
20,150 |
|
$ |
51,230 |
|
$ |
(31,080 |
) |
(60.7 |
) |
Total dollars repaid andcollected from sales |
46,985 |
|
41,480 |
|
5,505 |
|
13.3 |
|
|
|
|
|
|
|
|
|
|
As of: |
|
|
|
|
|
|
|
|
Total investments, at fair value |
$ |
608,336 |
|
$ |
631,186 |
|
$ |
(22,850 |
) |
(3.6 |
)% |
Fair value, as a percent of cost |
102.5 |
% |
105.2 |
% |
(2.7 |
)% |
(2.6 |
) |
Net assets |
$ |
406,830 |
|
$ |
403,506 |
|
$ |
3,324 |
|
0.8 |
|
Net asset value per common share |
12.39 |
|
12.29 |
|
0.10 |
|
0.8 |
|
Number of portfolio companies |
29 |
|
29 |
|
— |
|
— |
|
(A) |
Inclusive of $0.9 million, or $0.03 per weighted-average common
share, and $(0.5) million, or $(0.02) per weighted-average common
share, of capital gains-based incentive fees accrued during the
three months ended September 30, 2019, and reversed during the
three months ended June 30, 2019, respectively. These fees were
accrued or reversed in accordance with United States generally
accepted accounting principles (“U.S. GAAP”), where such amounts
were not contractually due under the terms of the investment
advisory agreement for the respective periods. Also see discussion
under Non-GAAP Financial Measure – Adjusted Net Investment Income
below. |
(B) |
See Non-GAAP Financial Measure — Adjusted Net Investment Income
below for a description of this non-GAAP measure and a
reconciliation from Net investment income to Adjusted net
investment income, including on a weighted-average per share basis.
The Company uses this non-GAAP financial measure internally in
analyzing financial results and believes that this non-GAAP
financial measure is useful to investors as an additional tool
to evaluate ongoing results and trends for the Company. |
(C) |
Estimates of tax characterization made on a quarterly basis may not
be representative of the actual tax characterization of
distributions for the full year. Estimates made on a quarterly
basis are updated as of each interim reporting date. |
|
|
NM = Not Meaningful
Highlights for the Quarter: During the
quarter ended September 30, 2019, the following significant events
occurred:
- Portfolio Activity:
- Invested $4.4 million through a combination of secured first
lien debt and common equity into one new portfolio company;
- Invested $15.8 million in existing portfolio companies;
and
- Exited one investment, which resulted in success fee income of
$1.9 million, repayment of our debt investments of $13.3 million at
par, and a net realized gain of $20.4 million.
- Distributions and Dividends:
- Paid the following monthly cash distributions to common
stockholders and dividends to preferred stockholders for each of
July, August, and September 2019:
- $0.068 per common share;
- $0.13020833 per share to holders of our 6.25% Series D
Cumulative Term Preferred Stock (“Series D Term Preferred
Stock”);
- $0.13281250 per share to holders of our 6.375% Series E
Cumulative Term Preferred Stock (“Series E Term Preferred Stock”);
and
- Paid a $0.03 per common share supplemental distribution in
September 2019.
Second Quarter Results: Net
investment income for the quarters ended September 30, 2019 and
June 30, 2019 was $6.6 million, or $0.20 per weighted-average
common share, and $8.9 million, or $0.27 per weighted-average
common share, respectively. This decrease was primarily a result of
an increase in total expenses, net of credits, and a slight
decrease in total investment income quarter over quarter.
Total investment income during the quarters ended September 30,
2019 and June 30, 2019 was $16.6 million and $17.3 million,
respectively. The slight quarter over quarter decrease was due to a
$2.9 million decrease in other income, as the timing of dividend
and success fee income can be variable, which more than offset the
$2.3 million increase in interest income, which was primarily
driven by the collection of past-due amounts upon the exit of one
portfolio company.
Total expenses, net of credits, during the quarters ended
September 30, 2019 and June 30, 2019, were $10.1 million and $8.5
million, respectively. The quarter over quarter increase was
primarily due to a $0.8 million increase in other expenses, largely
due to tax expense, and a $0.8 million decrease in credits to fees
from the adviser. The $1.3 million decrease in the income-based
incentive fee resulting from lower pre-incentive fee net investment
income was offset by a $1.4 million increase in the capital
gains-based incentive fee.
Net asset value per common share as of September 30, 2019
increased to $12.39, compared to $12.29 as of June 30, 2019. The
quarter over quarter increase was primarily due to $21.1 million,
or $0.65 per common share, of net realized gains on investments
mostly resulting from the exit of one portfolio company, and $6.6
million, or $0.20 per common share, of net investment income,
partially offset by $16.9 million, or $0.51 per common share, of
net unrealized depreciation of investments and $7.7 million, or
$0.23 per common share, of distributions paid to common
shareholders.
Subsequent Events: After September 30,
2019, the following significant events occurred:
- Significant investment activity:
- In October 2019, we exited our investment in B-Dry, LLC, with a
fair value of $0 as of September 30, 2019, and recorded a realized
loss of $14.7 million.
- Distributions and Dividends Declared: In
October 2019, our Board of Directors declared the following monthly
and supplemental cash distributions to common stockholders and
monthly dividends to holders of our series of term preferred
stock:
Record Date |
|
Payment Date |
|
Distributionper CommonShare |
|
Dividend perShare
ofSeries D TermPreferred Stock |
|
Dividend perShare
ofSeries E TermPreferredStock |
October 22, 2019 |
|
October 31, 2019 |
|
$ |
0.068 |
|
$ |
0.13020833 |
|
$ |
0.13281250 |
November 19, 2019 |
|
November 29, 2019 |
|
0.068 |
|
0.13020833 |
|
0.13281250 |
December 3, 2019 |
|
December 13, 2019 |
|
0.090 |
(A) |
— |
|
— |
December 19, 2019 |
|
December 31, 2019 |
|
0.068 |
|
0.13020833 |
|
0.13281250 |
|
|
Total for theQuarter: |
|
$ |
0.294 |
|
$ |
0.39062499 |
|
$ |
0.39843750 |
(A) |
Represents a supplemental distribution to common stockholders. |
Non-GAAP Financial Measure — Adjusted Net Investment
Income: On a supplemental basis, the Company discloses
Adjusted net investment income, including on a per share basis,
which is a financial measure that is calculated and presented on a
basis of methodology other than in accordance with U.S. GAAP
(“non-GAAP”). Adjusted net investment income represents net
investment income, excluding capital gains-based incentive
fees. The Company uses this non-GAAP financial measure
internally in analyzing financial results and believes that this
non-GAAP financial measure is useful to investors as an additional
tool to evaluate ongoing results and trends for the Company. The
Company’s investment advisory agreement provides that a capital
gains-based incentive fee is determined and paid annually with
respect to realized capital gains (but not unrealized appreciation)
to the extent such realized capital gains exceed realized capital
losses and unrealized depreciation on investments for such year.
However, under U.S. GAAP, a capital gains-based incentive fee is
accrued if realized capital gains and unrealized appreciation of
investments exceed realized capital losses and unrealized
depreciation of investments. Refer to Note 4 – Related Party
Transactions in our Quarterly Report on Form 10-Q for further
discussion. The Company believes that Adjusted net investment
income is a useful indicator of operations exclusive of any capital
gains-based incentive fees, as net investment income does not
include realized or unrealized investment activity associated with
the capital gains-based incentive fee.
The following table provides a reconciliation of net investment
income (the most comparable U.S. GAAP measure) to Adjusted net
investment income for the periods presented (dollars in thousands,
except per share amounts; unaudited):
|
For the quarter ended |
|
September 30, 2019 |
|
June 30, 2019 |
|
Amount |
|
Per ShareAmount |
|
Amount |
|
Per ShareAmount |
Net investment income |
$ |
6,583 |
|
$ |
0.20 |
|
$ |
8,855 |
|
|
$ |
0.27 |
|
Capital gains-based incentive
fee |
|
858 |
|
|
0.03 |
|
|
(512 |
) |
|
|
(0.02 |
) |
Adjusted net investment
income |
$ |
7,441 |
|
$ |
0.23 |
|
$ |
8,343 |
|
|
$ |
0.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net investment income may not be comparable to similar
measures presented by other companies, as it is a non-GAAP
financial measure that is not based on a comprehensive set of
accounting rules or principles and therefore may be defined
differently by other companies. In addition, Adjusted net
investment income should be considered in addition to, not as a
substitute for, or superior to, financial measures determined in
accordance with U.S. GAAP.
Conference Call: The Company will hold
its earnings release conference call on Tuesday, November 5, 2019,
at 8:30 a.m. EST. Please call (855) 376-7516 to enter the
conference. An operator will monitor the call and set a queue for
any questions. A replay of the conference call will be available
through November 12, 2019. To hear the replay, please dial (855)
859-2056 and use the playback conference number 8878206. The replay
will be available beginning approximately one hour after the call
concludes. The live audio broadcast of the Company’s quarterly
conference call will also be available online at
www.gladstoneinvestment.com. The event will be archived and
available for replay on the Company’s website through January 5,
2020.
About Gladstone Investment
Corporation: Gladstone Investment
Corporation is a publicly traded business development company that
seeks to make secured debt and equity investments in lower middle
market businesses in the United States in connection with
acquisitions, changes in control and recapitalizations. Information
on the business activities of all the Gladstone funds can be found
at www.gladstonecompanies.com.
To obtain a paper copy of our Quarterly Report on Form 10-Q,
filed today with the SEC, please contact the Company at 1521
Westbranch Drive, Suite 100, McLean, VA 22102, ATTN: Investor
Relations. The financial information above is not comprehensive and
is without notes, so readers should obtain and carefully review the
Company’s Form 10-Q for the three months ended September 30, 2019,
including the notes to the consolidated financial statements
contained therein.
Source: Gladstone Investment Corporation
Investor Relations Inquiries:
Please visit ir.gladstoneinvestment.com. or +1-703-287-5893.
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