Gladstone Investment Corporation (NASDAQ:GAIN) (the “Company”)
today announced earnings for its fourth quarter and fiscal year
ended March 31, 2018. Please read the Company’s Annual Report on
Form 10-K 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 Company’s website at
www.gladstoneinvestment.com.
Summary Information:
(dollars in thousands, except per share data (unaudited)):
|
|
March 31, 2018 |
|
December 31,2017 |
|
Change |
|
%Change |
|
For the quarter ended: |
|
|
|
|
|
|
|
|
|
Total
investment income |
|
$ |
15,419 |
|
$ |
16,184 |
|
$ |
(765) |
|
(4.7)% |
|
Total
expenses, net(A) |
|
12,175 |
|
8,653 |
|
3,522 |
|
40.7 |
|
Net
investment income(A) |
|
3,244 |
|
7,531 |
|
(4,287) |
|
(56.9) |
|
Net
realized gain |
|
189 |
|
25 |
|
164 |
|
656.0 |
|
Net
unrealized appreciation |
|
18,413 |
|
9,588 |
|
8,825 |
|
92.0 |
|
Net
increase in net assets resulting from operations(A) |
|
21,846 |
|
17,144 |
|
4,702 |
|
27.4 |
|
Net
investment income per weighted average common share(A) |
|
0.10 |
|
0.23 |
|
(0.13) |
|
(56.5) |
|
Adjusted
net investment income per weighted average common share(B) |
|
0.21 |
|
0.25 |
|
(0.04) |
|
(16.0) |
|
Net
increase in net assets resulting from operations per weighted
average common share(A) |
|
0.67 |
|
0.53 |
|
0.14 |
|
26.4 |
|
Cash
distribution per common share from net investment income |
|
0.19 |
|
0.27 |
|
(0.08) |
|
(29.6) |
|
Cash
distribution per common share from realized gains(C) |
|
— |
|
(0.01) |
|
0.01 |
|
(100.0) |
|
|
|
|
|
|
|
|
|
|
|
Distributions coverage ratio(D) |
|
157.7% |
|
177.4% |
|
(19.7)% |
|
(11.1) |
|
Weighted
average yield on interest-bearing investments |
|
12.6 |
|
14.2 |
|
(1.6) |
|
(11.3) |
|
Total
dollars invested |
|
$ |
27,351 |
|
$ |
39,540 |
|
$ |
(12,189) |
|
(30.8) |
|
Total
dollars repaid and collected from sales |
|
13,242 |
|
3,211 |
|
10,031 |
|
312.4 |
|
|
|
|
|
|
|
|
|
|
|
As
of: |
|
|
|
|
|
|
|
|
|
Total
investments, at fair value |
|
$ |
599,147 |
|
$ |
566,379 |
|
$ |
32,768 |
|
5.8% |
|
Fair
value, as a percent of cost |
|
102.4% |
|
99.2% |
|
3.2% |
|
3.2 |
|
Net
assets |
|
$ |
354,200 |
|
$ |
337,397 |
|
$ |
16,803 |
|
5.0 |
|
Net asset
value per common share |
|
10.85 |
|
10.37 |
|
0.48 |
|
4.6 |
|
Number of
portfolio companies |
|
33 |
|
34 |
|
(1) |
|
(2.9) |
|
|
|
March 31, 2018 |
|
March 31, 2017 |
|
Change |
|
%Change |
|
For the year ended: |
|
|
|
|
|
|
|
|
|
Total
investment income |
|
$ |
58,355 |
|
$ |
51,875 |
|
$ |
6,480 |
|
12.5% |
|
Total
expenses, net(A) |
|
36,395 |
|
29,453 |
|
6,942 |
|
23.6 |
|
Net
investment income(A) |
|
21,960 |
|
22,422 |
|
(462) |
|
(2.1) |
|
Net
realized gain |
|
1,336 |
|
15,387 |
|
(14,051) |
|
(91.3) |
|
Net
unrealized appreciation |
|
37,391 |
|
6,954 |
|
30,437 |
|
437.7 |
|
Net
increase in net assets resulting from operations(A) |
|
60,687 |
|
44,763 |
|
15,924 |
|
35.6 |
|
Net
investment income per weighted average common share(A) |
|
0.68 |
|
0.74 |
|
(0.06) |
|
(8.1) |
|
Adjusted
net investment income per weighted average common share(B) |
|
0.82 |
|
0.74 |
|
0.08 |
|
10.8 |
|
Net
increase in net assets resulting from operations per weighted
average common share(A) |
|
1.88 |
|
1.48 |
|
0.40 |
|
27.0 |
|
Cash
distribution per common share from net investment income |
|
0.84 |
|
0.75 |
|
0.09 |
|
12.0 |
|
Cash
distribution per common share from realized gains(C) |
|
0.05 |
|
— |
|
0.05 |
|
NM |
|
|
|
|
|
|
|
|
|
|
|
Distributions coverage ratio(D) |
|
113.5% |
|
132.1% |
|
(18.6)% |
|
(14.1) |
|
Weighted
average yield on interest-bearing investments |
|
13.1 |
|
12.7 |
|
0.4 |
|
3.1 |
|
Total
dollars invested |
|
$ |
98,539 |
|
$ |
62,446 |
|
$ |
36,093 |
|
57.8 |
|
Total
dollars repaid and collected from sales |
|
39,859 |
|
68,825 |
|
(28,966) |
|
(42.1) |
|
|
|
|
|
|
|
|
|
|
|
As
of: |
|
|
|
|
|
|
|
|
|
Total
investments, at fair value |
|
$ |
599,147 |
|
$ |
501,579 |
|
$ |
97,568 |
|
19.5% |
|
Fair
value, as a percent of cost |
|
102.4% |
|
95.5% |
|
6.9% |
|
7.2 |
|
Net
assets |
|
$ |
354,200 |
|
$ |
301,082 |
|
$ |
53,118 |
|
17.6 |
|
Net asset
value per common share |
|
10.85 |
|
9.95 |
|
0.90 |
|
9.0 |
|
Number of
portfolio companies |
|
33 |
|
35 |
|
(2) |
|
(5.7) |
|
(A) |
|
|
Inclusive
of $3.6 million, or $0.11 per weighted-average common share, and
$0.8 million, or $0.02 per weighted-average common share, of
capital gains-based incentive fees accrued during the three months
ended March 31, 2018 and the three months ended December 31, 2017,
respectively, and $4.4 million, or $0.14 per weighted-average
common share, of capital gains-based incentive fees accrued during
the year ended March 31, 2018. These fees were accrued in
accordance with United States generally accepted accounting
principles (“U.S. GAAP”), where such amounts are 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. |
(D) |
|
|
Distributions coverage ratio is calculated by dividing (i) the sum
of net investment income in excess of distributions at the end of
the period and distributions to common stockholders from net
investment income during the period by (ii) current period
distributions from net investment income to common
stockholders. |
|
|
|
|
NM = Not Meaningful |
Highlights for the Quarter: During the
quarter ended March 31, 2018, the following significant events
occurred:
- Portfolio Activity:
- Invested $27.4 million in existing portfolio companies and
received repayments and proceeds from sales of $13.2 million.
- Financing Activity:
- Entered into equity distribution agreements (commonly referred
to as “at-the-market” or “ATM” programs) to sell up to an aggregate
offering amount of $35.0 million. In March 2018, we sold 127,412
shares of common stock at a weighted-average net price of $10.24
per share resulting in net proceeds of $1.3 million.
- Distributions and Dividends:
- Paid the following monthly cash distributions to common
stockholders and dividends to preferred stockholders for each of
January, February, and March 2018:
- $0.065 per common share, per month;
- $0.140625 per share, per month, for the Company’s 6.75% Series
B Cumulative Term Preferred Stock (“Series B Term Preferred
Stock”);
- $0.135417 per share, per month, for the Company’s 6.50% Series
C Cumulative Term Preferred Stock (“Series C Term Preferred
Stock”); and
- $0.13020833 per share to holders of our 6.25% Series D
Cumulative Term Preferred Stock (“Series D Term Preferred
Stock”).
Fourth Quarter Results: Net
investment income for the quarters ended March 31, 2018 and
December 31, 2017 was $3.2 million, or $0.10 per weighted-average
common share, and $7.5 million, or $0.23 per weighted-average
common share, respectively. Net investment income decreased period
over period primarily as a result of higher incentive fees,
including $3.6 million, or $0.11 per weighted-average common share,
of capital gains-based incentive fees accrued under U.S. GAAP, the
payment of which is not contractually due under the terms of our
investment advisory agreement, in the current period. Total
investment income also decreased period over period as a result of
lower interest and other income. Also see discussion under Non-GAAP
Financial Measure – Adjusted Net Investment Income below.
Net asset value per common share as of March 31, 2018 increased
to $10.85 compared to $10.37 as of December 31, 2017. The quarter
over quarter increase was primarily due to $18.4 million, or $0.57
per common share, of net unrealized appreciation, principally
resulting from improved performance and an increase in comparable
multiples used to estimate the fair value of certain portfolio
companies, partially offset by a decline in performance of certain
other portfolio companies. The increase was also partially offset
by the aforementioned accrual of $3.6 million, or $0.11 per common
share, of capital gains-based incentive fees accrued under U.S.
GAAP, the payment of which is not contractually due under the terms
of the investment advisory agreement, in the current period.
Fiscal Year End Results: Net investment income
for the fiscal years ended March 31, 2018 and 2017 was $22.0
million, or $0.68 per weighted-average common share, and $22.4
million, or $0.74 per weighted-average common share, respectively.
The slight year-over-year decrease in net investment income was
primarily due to higher incentive fees, including $4.4 million, or
$0.14 per weighted-average common share, of capital gains-based
incentive fees accrued under U.S. GAAP, the payment of which is not
contractually due under the terms of the investment advisory
agreement, in the current period. The increase in incentive fees
was partially offset by higher total investment income
year-over-year due to an increase in both interest and other
income. Also see discussion under Non-GAAP Financial Measure –
Adjusted Net Investment Income below.
Net asset value per common share as of March 31, 2018 increased
to $10.85 compared to $9.95 as of March 31, 2017. The
year-over-year increase was primarily due to $37.9 million, or
$1.17 per common share, of net unrealized appreciation, principally
resulting from improved performance and an increase in comparable
multiples of certain portfolio companies, partially offset by a
decline in performance of certain other portfolio companies and the
reversal of previously recorded net unrealized appreciation related
to exits. The increase was also partially offset by the
aforementioned accrual of $4.4 million, or $0.13 per common share,
of capital gains-based incentive fees under U.S. GAAP, the payment
of which is not contractually due under the terms of the investment
advisory agreement, in the current period.
Subsequent Events: After March 31, 2018,
the following significant events occurred:
- Significant Investments: In April 2018, we
invested $29.2 million in Bassett Creek Restoration, Inc. (d/b/a
J.R. Johnson, LLC) (“Bassett Creek”) through a combination of
secured first lien debt and preferred equity. Bassett Creek,
headquartered in Portland, Oregon, is a leading provider of
commercial restoration and renovation services to the Oregon and
Southwest Washington region.
- Financing Activity: Subsequent to March 31,
2018 and through May 8, 2018, we sold an additional 168,824 shares
of our common stock under our ATM program at a weighted-average net
price of $10.87 per share resulting in net proceeds of $1.8
million.
- Distributions and Dividends Declared: In April
2018, our Board of Directors declared the following increased
monthly distributions to common stockholders, a supplemental
distribution to common stockholders, and monthly dividends to
holders of our three series of term preferred stock:
|
|
|
|
|
|
|
|
|
|
|
|
Record Date |
|
Payment Date |
|
Distribution per Common Share |
|
Dividend per Share of Series B Term Preferred
Stock |
|
Dividend per Share of
Series C Term Preferred Stock |
|
Dividend per Share of
Series D Term Preferred Stock |
|
April
20, 2018 |
|
April
30, 2018 |
|
$ |
0.067 |
|
$ |
0.140625 |
|
$ |
0.135417 |
|
$ |
0.13020833 |
|
May
22, 2018 |
|
May
31, 2018 |
|
0.067 |
|
0.140625 |
|
0.135417 |
|
0.13020833 |
|
June
6, 2018 |
|
June
15, 2018 |
|
0.060 |
(A) |
— |
|
— |
|
— |
|
June
20, 2018 |
|
June
29, 2018 |
|
0.067 |
|
0.140625 |
|
0.135417 |
|
0.13020833 |
|
Total for the Quarter: |
|
$ |
0.261 |
|
$ |
0.421875 |
|
$ |
0.406251 |
|
$ |
0.39062499 |
|
(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 the capital gains-based incentive
fee. 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 capital
gains) to the extent such realized capital gains exceed realized
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 fee 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 from net
investment income (the most comparable GAAP measure) to Adjusted
net investment income for the periods presented:
|
|
|
|
|
|
For the quarter ended |
|
|
|
March 31, 2018 |
|
December 31, 2017 |
|
|
|
Amount |
|
Per Share Amount |
|
Amount |
|
Per ShareAmount |
|
Net investment
income |
|
$ |
3,244 |
|
$ |
0.10 |
|
$ |
7,531 |
|
$ |
0.23 |
|
Capital gains-based
incentive fee |
|
|
3,647 |
|
|
0.11 |
|
|
752 |
|
|
0.02 |
|
Adjusted net investment
income |
|
$ |
6,891 |
|
$ |
0.21 |
|
$ |
8,283 |
|
$ |
0.25 |
|
|
|
For the year ended |
|
|
|
March 31, 2018 |
|
March 31, 2017 |
|
|
|
Amount |
|
Per Share Amount |
|
Amount |
|
Per ShareAmount |
|
Net investment
income |
|
$ |
21,960 |
|
$ |
0.68 |
|
$ |
22,422 |
|
$ |
0.74 |
|
Capital gains-based
incentive fee |
|
|
4,399 |
|
|
0.14 |
|
|
— |
|
|
— |
|
Adjusted net investment
income |
|
$ |
26,359 |
|
$ |
0.82 |
|
$ |
22,422 |
|
$ |
0.74 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, May 16, 2018, at
8:30 a.m. EDT. 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 May 23, 2018. To hear the replay, please dial (855)
859-2056 and use the playback conference number 54424741. 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 July 16,
2018.
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. The Company
has paid 154 consecutive monthly cash distributions on its common
stock. Information on the business activities of all the Gladstone
funds can be found at www.gladstonecompanies.com.
To obtain a paper copy of our Annual Report on Form 10-K 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-K for the year ended March 31, 2018, including the notes to
the consolidated financial statements contained therein.
Source: Gladstone Investment Corporation
Investor Relations Inquiries:
Please visit www.gladstone.com or +1-703-287-5893.
Gladstone Investment (NASDAQ:GAIN)
Historical Stock Chart
From Mar 2024 to Apr 2024
Gladstone Investment (NASDAQ:GAIN)
Historical Stock Chart
From Apr 2023 to Apr 2024