Gladstone Capital Corporation Reports Financial Results for its Second Quarter Ended March 31, 2018
May 02 2018 - 4:37PM
Gladstone Capital Corporation (NASDAQ:GLAD) (the “Company”) today
announced earnings for its second fiscal quarter ended March 31,
2018. 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, and
the Company’s website at www.GladstoneCapital.com.
Summary Information (dollars in
thousands, except per share data) (unaudited):
|
|
|
|
|
|
|
|
|
|
For the Quarter
Ended: |
|
March 31,2018 |
|
December 31,2017 |
|
Change |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
Total
investment income |
|
$ |
11,086 |
|
$ |
10,859 |
|
$ |
227 |
|
2.1 |
% |
Total
expenses, net of credits |
|
(5,473 |
) |
(5,282 |
) |
191 |
|
(3.6 |
) |
Net
investment income |
|
5,613 |
|
5,577 |
|
36 |
|
0.6 |
|
Net
investment income per common share |
|
0.21 |
|
0.21 |
|
— |
|
— |
|
Cash
distribution per common share |
|
0.21 |
|
0.21 |
|
— |
|
— |
|
Net
realized gain |
|
324 |
|
441 |
|
(117 |
) |
(26.5 |
) |
Net
unrealized appreciation |
|
3,367 |
|
1,142 |
|
2,225 |
|
194.8 |
|
Net
increase in net assets resulting from operations |
|
9,304 |
|
7,160 |
|
2,144 |
|
29.9 |
|
Weighted
average yield on interest-bearing investments |
|
11.5 |
% |
12.0 |
% |
(0.5 |
)% |
(4.2 |
) |
Total
invested |
|
$ |
19,439 |
|
$ |
56,938 |
|
$ |
(37,499 |
) |
(65.9 |
) |
Total
repayments and net proceeds |
|
14,198 |
|
19,843 |
|
(5,645 |
) |
(28.4 |
) |
|
|
|
|
|
|
|
|
|
|
As of: |
|
March 31,2018 |
|
December 31,2017 |
|
Change |
|
% Change |
|
Total
investments, at fair value |
|
$ |
402,138 |
|
$ |
392,430 |
|
$ |
9,708 |
|
24.7 |
% |
Fair
value, as a percent of cost |
|
88.0 |
% |
87.2 |
% |
0.8 |
% |
0.9 |
|
Net asset
value per common share |
|
$ |
8.62 |
|
$ |
8.48 |
|
$ |
0.14 |
|
1.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Fiscal Quarter 2018 Highlights:
- Portfolio Activity: Invested $8.1 million in
one new portfolio company and $11.3 million in existing portfolio
companies. Received $14.2 million in repayments and net proceeds
from portfolio companies resulting in net originations of $5.2
million.
- ATM Program: Sold 265,579 shares of our common
stock at a weighted-average price of $8.89 per share through our
at-the-market program for gross proceeds of $2.4
million.
- LOC Amendment: Entered into Amendment No. 4
(the “Amendment”) to the Fifth Amended and Restated Credit
Agreement with KeyBank as administrative agent, managing agent and
lead arranger, Gladstone Management Corporation, the Company’s
financial adviser, as servicer, and certain other lenders party
thereto (together with the Amendment, the “Credit Facility”).
Amendment No. 4 amended the Credit Facility to:-- Extend the
revolving period from January 19, 2019 to January 15, 2021;--
Extend the maturity date from May 1, 2020 to April 15, 2022, at
which time all principal and interest will be due and payable;--
Reduce the interest rate margin by 40 basis points effective
immediately to 2.85% for the balance of the revolving period
(January 15, 2021), after which the margin increases to 3.25% for
the balance of the facility term;-- Change the unused commitment
fee from 0.50% of the total unused commitment amount to 0.50% when
the average unused commitment amount for the reporting period is
less than or equal to 50%, 0.75% when the average unused commitment
amount for the reporting period is greater than 50% but less than
or equal to 65%, and 1.00% when the average unused commitment
amount for the reporting period is greater than 65%; and-- Increase
the current commitment amount from $170 million to $190 million
with the ability to expand to a total facility amount of $265
million through additional commitments of existing
lenders.
- Recurring Distributions and Dividends: For
each of January, February, and March 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).
Second Fiscal Quarter 2018 Results:
Interest income increased by approximately $0.3 million, or
3.1%, due to an increase in the weighted-average interest-bearing
portfolio balance, slightly offset by a decrease in the
weighted-average yield and a decrease in other income quarter over
quarter. Total expenses increased slightly by 3.6% quarter
over quarter, primarily due to an increase in interest expense as a
result of increased borrowings outstanding quarter over
quarter.
Net Investment Income for the quarter ended March 31, 2018 was
approximately $5.6 million, or $0.21 per share, an increase of 0.6%
as compared to the prior quarter.
The Net Increase in Net Assets Resulting from Operations for the
quarters ended March 31, 2018 and December 31, 2017 was $9.3
million, or $0.35 per share, compared to $7.2 million, or $0.27 per
share, respectively. The quarter over quarter increase was
primarily driven by $3.4 million in net unrealized
appreciation.
Subsequent Events:
Subsequent to March 31, 2018, the following significant events
occurred:
- Portfolio Activity:-- In April 2018, we
invested $3.0 million in CHA Holdings, Inc. through secured second
lien debt.
- Distributions and Dividends Declared: In April
2018, our Board of Directors declared the following monthly
distributions to common stockholders and monthly dividends to
preferred shareholders:
|
|
Record Date |
|
Payment Date |
|
DistributionperCommon Share |
|
Distributionper Series2024 TermPreferred
Share |
|
April
20, 2018 |
|
April
30, 2018 |
|
$ |
0.07 |
|
$ |
0.125 |
|
May
22, 2018 |
|
May
31, 2018 |
|
0.07 |
|
0.125 |
|
June
20, 2018 |
|
June
29, 2018 |
|
0.07 |
|
0.125 |
|
|
|
Total for the Quarter |
|
$ |
0.21 |
|
$ |
0.375 |
|
|
|
|
|
|
|
|
|
|
|
- Small Business Credit Availability Act: On
April 10, 2018, our Board of Directors, including a “required
majority” (as such term is defined in Section 57(o) of the
Investment Company Act of 1940, as amended (the “1940 Act”)))
thereof, approved the modified asset coverage requirements set
forth in Section 61(a)(2) of the 1940 Act, as amended by the Small
Business Credit Availability Act. As a result, the Company’s asset
coverage requirements for senior securities will be changed from
200% to 150%, effective one year after the date of the Board of
Director’s approval, or April 10, 2019.
Comments from Gladstone Capital’s President, Bob
Marcotte: “The combination of interest income, net of
interest expense, increasing 25% over the prior year quarter and
the broad based portfolio appreciation this quarter, has lifted our
return on equity to 16.3% in the current quarter and to 12.6% for
the last four quarters. We continue to be well positioned to
improve on our results over the balance of fiscal year 2018 as the
full benefit of our recently reduced bank debt costs and the
expected rise in floating rates are realized.”
Conference Call for Stockholders: The Company
will hold its earnings release conference call on Thursday, May 3,
2018, at 8:30 a.m. EDT. 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 May 10, 2018. To hear the replay, please
dial (855) 859-2056 and use conference number 54345967. 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 July 3, 2018.
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 183 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-Q,
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 March 31, 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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