Gladstone Capital Corporation Reports Financial Results for its Fourth Quarter and Fiscal Year Ended September 30, 2018
November 14 2018 - 5:27PM
Gladstone Capital Corporation (NASDAQ:GLAD) (the “Company”) today
announced earnings for its fourth quarter and fiscal year ended
September 30, 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, and the Company’s website at
www.GladstoneCapital.com.
Summary Information (dollars in
thousands, except per share data) (unaudited):
For the
Quarter Ended: |
|
September
30,2018 |
|
June
30,2018 |
|
Change |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
Total investment
income |
|
$ |
11,257 |
|
$ |
12,379 |
|
$ |
(1,122 |
) |
(9.1 |
)% |
Total expenses, net of credits |
|
(5,355 |
) |
(6,383 |
) |
1,028 |
|
16.1 |
|
Net investment income |
|
5,902 |
|
5,996 |
|
(94 |
) |
(1.6 |
) |
Net investment income per common share |
|
0.21 |
|
0.22 |
|
(0.01 |
) |
(4.5 |
) |
Cash distribution per common share |
|
0.21 |
|
0.21 |
|
— |
|
— |
|
Net realized (loss) gain |
|
(27,160 |
) |
199 |
|
(27,359 |
) |
NM |
|
Net unrealized appreciation |
|
11,349 |
|
5,898 |
|
5,451 |
|
92.4 |
|
Net (decrease) increase in net assets resulting
from operations |
|
(9,909 |
) |
12,093 |
|
(22,002 |
) |
(181.9 |
) |
Weighted average yield on interest-bearing
investments |
|
11.9 |
% |
11.8 |
% |
0.1 |
% |
0.8 |
|
Total invested |
|
$ |
10,095 |
|
$ |
20,143 |
|
$ |
(10,048 |
) |
(49.9 |
) |
Total repayments and net proceeds |
|
9,547 |
|
24,356 |
|
(14,809 |
) |
(60.8 |
) |
|
|
|
|
|
|
|
|
|
|
As of: |
|
September
30,2018 |
|
June
30,2018 |
|
Change |
|
% Change |
|
Total investments, at fair value |
|
$ |
390,046 |
|
$ |
404,888 |
|
$ |
(14,842 |
) |
(3.7 |
)% |
Fair value, as a percent of cost |
|
91.2 |
% |
89.2 |
% |
2.0 |
% |
2.2 |
|
Net asset value per common share |
|
$ |
8.32 |
|
$ |
8.86 |
|
$ |
(0.54 |
) |
(6.1 |
) |
For the Year Ended: |
|
September 30,
2018 |
|
September 30,
2017 |
|
Change |
|
%Change |
|
|
|
|
|
|
|
|
|
|
|
Total investment
income |
|
$ |
45,581 |
|
$ |
39,233 |
|
$ |
6,348 |
|
16.2 |
% |
Total expenses, net of credits |
|
(22,493 |
) |
(17,800 |
) |
(4,693 |
) |
26.4 |
|
Net investment income |
|
23,088 |
|
21,433 |
|
1,655 |
|
7.7 |
|
Net investment income per common share |
|
0.85 |
|
0.84 |
|
0.01 |
|
1.2 |
|
Cash distribution per common share |
|
0.84 |
|
0.84 |
|
— |
|
— |
|
Total net realized loss |
|
(26,196 |
) |
(4,763 |
) |
(21,433 |
) |
(450.0 |
) |
Total net unrealized appreciation |
|
21,756 |
|
510 |
|
21,246 |
|
NM |
|
Net increase in net assets resulting from
operations |
|
18,648 |
|
17,180 |
|
1,468 |
|
8.5 |
|
Weighted average yield on interest-bearing
investments |
|
11.8 |
% |
11.6 |
% |
0.2 |
% |
1.7 |
|
Total invested |
|
$ |
106,615 |
|
$ |
112,092 |
|
$ |
(5,477 |
) |
(4.9 |
) |
Total repayments and proceeds |
|
67,944 |
|
83,444 |
|
(15,500 |
) |
(18.6 |
) |
|
|
|
|
|
|
|
|
|
|
As of: |
|
September
30,2018 |
|
September 30,
2017 |
|
Change |
|
% Change |
|
Total investments, at fair value |
|
$ |
390,046 |
|
$ |
352,373 |
|
$ |
37,673 |
|
10.7 |
|
Fair value as a percent of cost |
|
91.2 |
% |
85.6 |
% |
5.6 |
% |
6.6 |
|
Net asset value per common share |
|
$ |
8.32 |
|
$ |
8.40 |
|
$ |
(0.08 |
) |
(1.0 |
) |
Fourth Fiscal Quarter 2018 Highlights:
- Portfolio Activity: Invested $10.1 million in
existing portfolio companies. Received $9.5 million in repayments
and net proceeds from portfolio companies, including the payoff of
one of our debt investments at par.
- ATM Program: Sold 841,548 shares of our common
stock at a weighted-average price of $9.62 per share through our
at-the-market program for net proceeds of $8.0 million.
- Recurring Distributions and Dividends: For
each of July, August, and September 2018, paid monthly
distributions to common stockholders ($0.07 per common share) and
monthly dividends to preferred stockholders ($0.125 per share of
the Company’s 6.00% Series 2024 Term Preferred Stock).
Fourth Fiscal Quarter 2018 Results:
Interest income decreased by $0.6 million, or 5.1%, primarily
due to one investment being placed on non-accrual during the
quarter. Other income decreased by $0.5 million, or 57.2%, quarter
over quarter due to a decrease in success fees and prepayment fees,
which we received in the prior quarter associated with the payoff
of one of our investments. Total expenses decreased by $1.0
million, or 16.1%, primarily due to a decrease in net incentive
fees quarter over quarter.
Net Investment Income for the quarter ended September 30, 2018
was $5.9 million, or $0.21 per share, a decrease of 1.6% as
compared to the prior quarter.
The Net Decrease in Net Assets Resulting from Operations for the
quarter ended September 30, 2018 was $9.9 million, or $0.35 per
share, compared to the Net Increase in Net Assets Resulting from
Operations for the quarter ended June 30, 2018 of $12.1 million, or
$0.45 per share. The decrease was driven primarily by unrealized
depreciation recognized on the investment that was placed on
non-accrual during the quarter.
Fiscal Year Ended 2018 Results:
Total investment income increased by 16.2% during the fiscal
year ended September 30, 2018, compared to the prior year, due to
an increase in interest income, partially offset by a decrease in
other income. Interest income increased by $6.9 million, or
18.6%, due to an increase in the average investment portfolio
balance as well as an increase in the weighted average yield year
over year. Other income decreased by $0.5 million primarily
due to a decline in success fees recognized compared to the prior
year, as there were lower repayments in the current year.
Total expenses increased 26.4% year over year, primarily due to a
$2.9 million increase in our net base management and incentive fees
and a $2.8 million increase in our interest expense on
borrowings.
Net Investment Income for the years ended September 30, 2018 and
2017, was $23.1 million, or $0.85 per share, and $21.4 million, or
$0.84 per share, respectively.
Net Increase in Net Assets Resulting from Operations for the
years ended September 30, 2018 and 2017, was $18.6 million, or
$0.69 per share, compared to $17.2 million, or $0.67 per share,
respectively. The year over year change was driven by the
increase in net investment income compared to the prior
year.
Subsequent Events:
Subsequent to September 30, 2018, the following significant events
occurred:
- Debt offering: In November 2018, we completed
a public debt offering of $57.5 million aggregate principal amount
of 6.125% Notes due 2023 (the “2023 Notes”), inclusive of the
overallotment, for net proceeds of $55.5 million, after deducting
underwriting discounts, commissions and offering expenses borne by
us. The Notes will mature on November 1, 2023, and
may be redeemed in whole or in part at any time or from time to
time at the Company’s option on or after November 1,
2020. The 2023 Notes are traded under the ticker symbol
“GLADD” on the Nasdaq Global Select Market.
- Portfolio Activity: We closed on two
syndicated investments totaling $3.6 million and received
prepayments on two investments of $5.1 million in the
aggregate.
- Distributions and Dividends Declared: In
October 2018, our Board of Directors declared the following monthly
distributions to common stockholders and monthly dividends to
preferred shareholders:
Record Date |
|
Payment Date |
|
Distribution per Common
Share |
|
Distribution per Series
2024 Term Preferred Share |
|
October 19, 2018 |
|
October 31, 2018 |
|
$ |
0.07 |
|
$ |
0.125 |
|
November 20, 2018 |
|
November 30, 2018 |
|
0.07 |
|
0.125 |
|
December 20, 2018 |
|
December 31, 2018 |
|
0.07 |
|
0.125 |
|
|
|
Total for the Quarter |
|
$ |
0.21 |
|
$ |
0.375 |
|
Comments from Gladstone Capital’s President, Bob
Marcotte: “Fiscal year 2018 results were driven by a
strong 18.6% increase in interest income as our higher average
investment portfolio more than offset lower fee income and
spread compression associated with the more competitive
lending market conditions over the past year. We ended last
year with a strong capital base and a record backlog of investment
opportunities which position us well to enhance returns to our
shareholders in the coming quarters.”
Conference Call for Stockholders: The Company
will hold its earnings release conference call on Thursday,
November 15, 2018, at 8:30 a.m. EST. Please call (855)
465-0177 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 22, 2018.
To hear the replay, please dial (855) 859-2056 and use conference
number 1799486. The replay of the conference call 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.GladstoneCapital.com. The event will be archived and
available for replay on the Company’s website through January 15,
2019.
About Gladstone Capital Corporation: Gladstone
Capital Corporation is a publicly traded business development
company that invests in debt and equity securities, consisting
primarily of secured first and second lien term loans to lower
middle market businesses in the United States. Including
distributions through today, the Company has paid 189 consecutive
monthly or quarterly 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 the Company’s most recent Form 10-K,
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 September 30, 2018, including the
notes to the consolidated financial statements contained
therein.
Investor Relations Inquiries: Please visit
www.gladstonecompanies.com or +1-703-287-5893.
Forward-looking Statements:The statements in this press release
about future growth and shareholder returns are "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. These forward-looking statements
inherently involve certain risks and uncertainties in predicting
future results and conditions. Although these statements are based
on our 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 our filings with the U.S. 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.
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