MCLEAN, VA / ACCESSWIRE / February 2, 2021 / Gladstone Investment Corporation (NASDAQ:GAIN) (the "Company") today announced earnings for its third fiscal quarter ended December 31, 2020. 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)):
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December 31, 2020 | September 30, 2020 | Change | % Change | ||||||||||||
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For the quarter ended:
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Total investment income
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$ | 17,372 | $ | 11,840 | $ | 5,532 | 46.7 | % | ||||||||
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Total expenses, net(A)
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11,117 | 7,472 | 3,645 | 48.8 | ||||||||||||
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Net investment income(A)
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6,255 | 4,368 | 1,887 | 43.2 | ||||||||||||
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Net realized gain
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9,105 | 621 | 8,484 | NM | ||||||||||||
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Net unrealized (depreciation) appreciation
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(89) | 1,641 | (1,730 | ) | NM | |||||||||||
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Net increase in net assets resulting from operations(A)
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15,271 | 6,630 | 8,641 | 130.3 | ||||||||||||
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Net investment income per weighted-average common share(A)
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0.19 | 0.13 | 0.06 | 46.2 | ||||||||||||
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Adjusted net investment income per weighted-average common share(B)
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0.24 | 0.15 | 0.09 | 60.0 | ||||||||||||
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Net increase in net assets resulting from operations per weighted-average common share(A)
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0.46 | 0.20 | 0.26 | 130.0 | ||||||||||||
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Cash distribution per common share from net investment income
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0.20 | 0.20 | - | - | ||||||||||||
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Cash distribution per common share from net realized gains(C)
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0.01 | 0.01 | - | - | ||||||||||||
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Weighted-average yield on interest-bearing investments
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11.9 | 12.1 | (0.2 | ) | (1.7 | ) | ||||||||||
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Total dollars invested
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$ | 32,189 | $ | 57,082 | $ | (24,893 | ) | (43.6 | ) | |||||||
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Total dollars repaid and collected from sales
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49,145 | 1,484 | 47,661 | NM | ||||||||||||
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As of:
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Total investments, at fair value
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$ | 610,888 | $ | 608,962 | $ | 1,926 | 0.3 | % | ||||||||
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Fair value, as a percent of cost
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92.9 | % | 92.8 | % | 0.1 | % | 0.0 | |||||||||
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Net assets
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$ | 368,823 | $ | 360,526 | $ | 8,297 | 2.3 | |||||||||
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Net asset value per common share
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11.11 | 10.86 | 0.25 | 2.3 | ||||||||||||
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Number of portfolio companies
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28 | 29 | (1 | ) | (3.4 | ) | ||||||||||
(A) Inclusive of $1.8 million, or $0.05 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 December 31, 2020 and September 30, 2020, respectively. These fees were 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.
(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 December 31, 2020, the following significant events occurred:
- Portfolio Activity:
- Recapitalized one existing portfolio company and invested $27.0 million in the form of secured first lien debt, which resulted in dividend income of $3.2 million and additional equity proceeds representing a $7.5 million return of preferred equity cost basis and a realized gain of $3.3 million;
- Invested $3.0 million in the form of secured second lien debt in one existing portfolio company, which purchased a subsidiary of one of our other portfolio companies, resulting in partial repayment of our secured first lien debt with a realized loss of $8.5 million;
- Exited one investment, which resulted in dividend income of $0.9 million, success fee income of $0.2 million, repayment of our debt investment of $9.5 million at par, and a net realized gain of $14.0 million; and
- Invested $2.2 million in various existing portfolio companies.
- Distributions and Dividends:
- Paid the following monthly cash distributions to common stockholders and dividends to preferred stockholders for each of October, November, and December 2020:
- $0.07 per common share;
- $0.13020833 per share to holders of our 6.25% Series D Cumulative Term Preferred Stock ("Series D Term Preferred Stock"); and
- $0.13281250 per share to holders of our 6.375% Series E Cumulative Term Preferred Stock ("Series E Term Preferred Stock").
- Paid the following monthly cash distributions to common stockholders and dividends to preferred stockholders for each of October, November, and December 2020:
- At-the-market ("ATM") Program Activity:
- Sold 526,243 shares of our Series E Term Preferred Stock under our Series E ATM Program with an aggregate liquidation preference of $13.2 million and raised approximately $12.8 million in net proceeds.
Third Quarter Results: Net investment income for the quarters ended December 31, 2020 and September 30, 2020 was $6.3 million, or $0.19 per weighted-average common share, and $4.4 million, or $0.13 per weighted-average common share, respectively. This increase was a result of an increase in total investment income, partially offset by an increase total expenses, net of credits, quarter over quarter.
Total investment income during the quarters ended December 31, 2020 and September 30, 2020 was $17.4 million and $11.8 million, respectively. The quarter over quarter increase was primarily due to a $5.2 million increase in dividend and success fee income, the timing of which can be variable.
Total expenses, net of credits, during the quarters ended December 31, 2020 and September 30, 2020, were $11.1 million and $7.5 million, respectively. The quarter over quarter increase was primarily a result of $2.0 million income-based incentive fees and $1.8 million capital gains-based incentive fees in the current quarter, compared to $0.5 million capital gains-based incentive fees in the prior quarter, and a $0.3 million decrease in credits to fees from adviser, partially offset by a $0.3 million decrease in other expenses, primarily related to a decrease in stockholder related expenses.
Net asset value per common share as of December 31, 2020 was $11.11, compared to $10.86 as of September 30, 2020. The quarter over quarter increase was primarily due to $9.1 million, or $0.27 per common share, of net realized gains on investments, $6.3 million, or $0.19 per common share, of net investment income, partially offset by $7.0 million, or $0.21 per common share, of distributions paid to common shareholders. During the quarter ended December 31, 2020, net unrealized depreciation totaled $0.1 million, as $11.8 million of unrealized appreciation of our current portfolio was offset by the reversal of $11.9 million of previously recorded unrealized appreciation upon the exit of one portfolio company.
Subsequent Events: After December 31, 2020, the following significant events occurred:
- Distributions and dividends: In January 2021, our Board of Directors declared the following monthly cash distributions to common stockholders and monthly dividends to holders of our series of term preferred stock:
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Record Date
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Payment Date
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Distribution per Common Share
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Dividend per
Share of
Series D Term Preferred Stock
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Dividend per
Share of
Series E Term Preferred Stock
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January 22, 2021
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January 29, 2021
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$
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0.07
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$
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0.13020833
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$
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0.13281250
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February 17, 2021
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February 26, 2021
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0.07
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0.13020833
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0.13281250
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March 18, 2021
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March 31, 2021
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0.07
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0.13020833
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0.13281250
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Total for the Quarter:
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$
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0.21
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$
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0.39062499
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$
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0.39843750
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- COVID-19 Impact: We continue to closely monitor and work with our portfolio companies to navigate the significant challenges created by the continuing COVID-19 pandemic and are focused on ensuring the safety of the adviser's and administrator's personnel and of the employees of our portfolio companies, while also managing our ongoing business activities. While we are closely monitoring all of our portfolio companies, our portfolio continues to be diverse from a geographic and industry perspective. Through proactive measures and continued diligence, the management teams of our portfolio companies continue to demonstrate their ability to respond effectively and efficiently to the challenges posed by COVID-19 and related orders imposed by state and local governments, including paused or reversed reopening orders. We believe we have sufficient levels of liquidity to support our existing portfolio companies, as necessary, and selectively deploy capital in new investment opportunities.
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 Annual Report on Form 10-K 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):
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For the quarter ended | |||||||||||||||
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December 31, 2020 | September 30, 2020 | ||||||||||||||
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Amount | Per Share Amount | Amount |
Per Share
Amount
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Net investment income
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$ | 6,255 | $ | 0.19 | $ | 4,368 | $ | 0.13 | ||||||||
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Capital gains-based incentive fee
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1,754 | 0.05 | 452 | 0.02 | ||||||||||||
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Adjusted net investment income
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$ | 8,009 | $ | 0.24 | $ | 4,820 | $ | 0.15 | ||||||||
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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 Wednesday, February 3, 2021, at 8:30 a.m. EST. 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 February 10, 2021. To hear the replay, please dial (877) 660-6853 and use the playback conference number 13713653. 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 December 31, 2020, including the notes to the consolidated financial statements contained therein.
Investor Relations Inquiries: Please visit ir.gladstoneinvestment.com. or +1-703-287-5893.
SOURCE: Gladstone Investment Corporation