Gladstone Investment Corporation Reports Financial Results for its Second Quarter Ended September 30, 2022
Gladstone Investment Corporation (Nasdaq: GAIN) reported its Q2 earnings for the period ending September 30, 2022. Total investment income rose by 7.8% to $20.8 million, driven by increased interest income. Net investment income surged 54.9% to $11.4 million, or $0.34 per share. Total expenses decreased by 21.4% to $9.4 million. However, net realized gains fell 48.3%, resulting in a $3.1 million net increase in assets from operations. The net asset value per share declined slightly to $13.31. The board declared increased monthly distributions of $0.08 per share starting October 2022.
- Net investment income increased by 54.9% to $11.4 million.
- Total investment income rose by 7.8% to $20.8 million.
- Total expenses decreased by 21.4%, benefiting profitability.
- Monthly distribution per share increased to $0.08, a 6.7% rise.
- Net realized gains fell by 48.3% to $2.3 million.
- Net unrealized depreciation of investments totaled $10.6 million.
- Net increase in net assets from operations dropped by 74.4%.
MCLEAN, VA / ACCESSWIRE / November 1, 2022 / Gladstone Investment Corporation (Nasdaq:GAIN) (the "Company") today announced earnings for its second quarter ended September 30, 2022. 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 investors section of the Company's website at www.gladstoneinvestment.com.
Summary Information: (dollars in thousands, except per share data (unaudited)):
| September 30, 2022 | June 30, 2022 | $ Change | % Change | |||||||||||||
For the quarter ended: | ||||||||||||||||
Total investment income | $ | 20,795 | $ | 19,297 | $ | 1,498 | 7.8 | % | ||||||||
Total expenses, net(A) | 9,379 | 11,926 | (2,547) | (21.4) | % | |||||||||||
Net investment income(A) | 11,416 | 7,371 | 4,045 | 54.9 | % | |||||||||||
Net realized gain | 2,302 | 4,452 | (2,150) | (48.3) | % | |||||||||||
Net unrealized (depreciation) appreciation | (10,643) | 212 | (10,855) | NM | ||||||||||||
Net increase in net assets resulting from operations(A) | $ | 3,075 | $ | 12,035 | $ | (8,960) | (74.4) | % | ||||||||
Net investment income per weighted-average common share(A) | $ | 0.34 | $ | 0.22 | $ | 0.12 | 54.5 | % | ||||||||
Adjusted net investment income per weighted-average common share(B) | $ | 0.29 | $ | 0.25 | $ | 0.04 | 16.0 | % | ||||||||
Net increase in net assets resulting from operations per weighted-average common share(A) | $ | 0.09 | $ | 0.36 | $ | (0.27) | (75.0) | % | ||||||||
Cash distribution per common share from net investment income | $ | 0.14 | $ | 0.10 | $ | 0.04 | 40.0 | % | ||||||||
Cash distribution per common share from net realized gains(C) | $ | 0.08 | $ | 0.25 | $ | (0.17) | (68.0) | % | ||||||||
Weighted-average yield on interest-bearing investments | 12.1 | % | 11.9 | % | 0.2 | % | 1.7 | % | ||||||||
Total dollars invested | $ | 74,246 | $ | 27,800 | $ | 46,446 | 167.1 | % | ||||||||
Total dollars repaid and collected from sales | $ | 12,338 | $ | 57,352 | $ | (45,014) | (78.5) | % | ||||||||
Weighted-average shares of common stock outstanding - basic and diluted | 33,218,901 | 33,205,023 | 13,878 | NM | ||||||||||||
As of: | ||||||||||||||||
Total investments, at fair value | $ | 737,935 | $ | 689,513 | $ | 48,422 | 7.0 | % | ||||||||
Fair value, as a percent of cost | 104.9 | % | 107.0 | % | (2.1) | % | (2.0) | % | ||||||||
Net assets | $ | 442,470 | $ | 446,409 | $ | (3,939) | (0.9) | % | ||||||||
Net asset value per common share | $ | 13.31 | $ | 13.44 | $ | (0.13) | (1.0) | % | ||||||||
Number of portfolio companies | 26 | 26 | - | - | % | |||||||||||
NM = Not Meaningful
- Inclusive of
$1.7 million , or$0.05 per weighted-average common share, of capital gains-based incentive fees reversed during the three months ended September 30, 2022 and$0.9 million , or$0.03 per weighted-average common share, of capital gains-based incentive fees accrued during the three months ended June 30, 2022, respectively. These fees were (reversed)/accrued 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. - 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 it is useful to investors as an additional tool to evaluate ongoing results and trends for the Company.
- 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.
Highlights for the Quarter: During the quarter ended September 30, 2022, the following significant events occurred:
- Portfolio Activity:
- Invested
$39.1 million in our portfolio company, Dema/Mai Holdings, Inc., in the form of secured first lien debt to acquire Dema Plumbing, a plumbing and mechanical services installation and service provider to single-family residential homebuilders; - Recapitalized our investment in Horizon Facilities Services, Inc. and invested an additional
$30.0 million in the form of secured first lien debt. In connection with this investment, we received equity proceeds of$12.3 million , which were recognized as a$10.1 million return of equity cost basis and a realized gain of$2.2 million , as well as dividend income of$3.1 million and success fee income of$1.7 million ; and - In conjunction with a refinancing at Ginsey Home Solutions, Inc., our outstanding
$13.3 million of secured second lien debt was reduced to$12.2 million and converted to secured first lien debt, after a$5.1 million payment made by Ginsey to extinguish our secured borrowing liability and an additional investment of$4.0 million .
- Invested
- Distributions and Dividends:
- Paid
$0.07 5 per common share to common stockholders in each of July, August, and September 2022.
- Paid
- At-the-market ("ATM") program activity:
- Sold 29,640 shares of our common stock under our common stock ATM Program at a weighted-average gross price of
$15.75 per share and raised approximately$0.5 million in net proceeds. These sales were above our then-current estimated NAV per share.
- Sold 29,640 shares of our common stock under our common stock ATM Program at a weighted-average gross price of
Second Quarter Results: Net investment income for the quarter ended September 30, 2022 was
Total investment income during the quarters ended September 30, 2022 and June 30, 2022 was
Total expenses, net of credits, during the quarters ended September 30, 2022 and June 30, 2022 was
Net asset value per common share as of September 30, 2022 was
Subsequent Events: After September 30, 2022, the following significant events occurred:
- Significant Investment Activity:
- In October 2022, we invested an additional
$8.4 million in the form of secured first lien debt in Nocturne Villa Rentals, Inc. to fund an add-on acquisition.
- In October 2022, we invested an additional
Distributions and dividends: In October 2022, our Board of Directors declared the following monthly and supplemental distributions to common stockholders. The
Record Date | Payment Date | Distribution per Common Share | |||
October 21, 2022 | October 31, 2022 | $ | 0.080 | ||
November 18, 2022 | November 30, 2022 | 0.080 | |||
December 6, 2022 | December 15, 2022 | 0.120 | (A) | ||
December 20, 2022 | December 30, 2022 | 0.080 | |||
Total for the Quarter: | $ | 0.360 | |||
(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 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 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 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, 2022 | June 30, 2022 | |||||||||||||||
| Amount | Per Share Amount | Amount | Per Share Amount | |||||||||||||
Net investment income | $ | 11,416 | $ | 0.34 | $ | 7,371 | $ | 0.22 | ||||||||
Capital gains-based incentive fee | (1,669) | (0.05) | 933 | 0.03 | ||||||||||||
Adjusted net investment income | $ | 9,747 | $ | 0.29 | $ | 8,304 | $ | 0.25 | ||||||||
Weighted-average shares of common stock outstanding - basic and diluted | 33,218,901 | 33,205,023 | ||||||||||||||
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 GAAP.
Conference Call: The Company will hold its earnings release conference call on Wednesday, November 2, 2022, at 8:30 a.m. Eastern Time. Please call (866) 373-3416 to enter the conference call. An operator will monitor the call and set a queue for any questions. A replay of the conference call will be available through November 9, 2022. To hear the replay, please dial (877) 660-6853 and use the playback conference number 13732343. 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.
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 quarter ended September 30, 2022, including the notes to the consolidated financial statements contained therein.
Investor Relations Inquiries: Please visit ir.gladstoneinvestment.com. or +1-703-287-5893.
Forward-looking Statements:
The statements in this press release regarding potential future distributions, earnings and operations of the Company are "forward-looking statements." These forward-looking statements inherently involve certain risks and uncertainties in predicting future results and conditions. Although these statements are based on the Company's current plans that are believed to be reasonable as of the date of this press release, a number of factors could cause actual results and conditions to differ materially from these forward-looking statements, including those factors described from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or otherwise, except as required by law.
SOURCE: Gladstone Investment Corporation
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