Gladstone Investment Corporation Reports Financial Results for its First Quarter Ended June 30, 2020
July 28 2020 - 4:30PM
Gladstone Investment Corporation (Nasdaq: GAIN) (the “Company”)
today announced earnings for its first quarter ended June 30, 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 investor
relations section of the Company’s website at
www.gladstoneinvestment.com.
Summary Information: (dollars
in thousands, except per share data (unaudited)):
|
|
June 30, 2020 |
|
March 31, 2020 |
|
Change |
|
%Change |
|
For the quarter ended: |
|
|
|
|
|
|
|
|
|
Total investment income |
|
$ |
10,707 |
|
$ |
11,982 |
|
$ |
(1,275 |
) |
(10.6 |
)% |
Total expenses, net(A) |
|
6,534 |
|
(2,784 |
) |
9,318 |
|
NM |
|
Net investment income(A) |
|
4,173 |
|
14,766 |
|
(10,593 |
) |
(71.7 |
) |
Net realized gain (loss) |
|
753 |
|
(10,879 |
) |
11,632 |
|
NM |
|
Taxes on deemed distribution of long-term capital gains |
|
— |
|
(10,260 |
) |
10,260 |
|
NM |
|
Net unrealized depreciation |
|
(4,887 |
) |
(31,229 |
) |
26,342 |
|
(84.4 |
) |
Net increase (decrease) in net assets resulting from
operations(A) |
|
39 |
|
(37,602 |
) |
37,641 |
|
NM |
|
Net investment income per weighted-average common share(A) |
|
0.13 |
|
0.45 |
|
(0.32 |
) |
(71.1 |
) |
Adjusted net investment income per weighted-average common
share(B) |
|
0.11 |
|
0.19 |
|
(0.8 |
) |
(42.1 |
) |
Net increase (decrease) in net assets resulting from operations per
weighted-average common share(A) |
|
— |
|
(1.15 |
) |
1.15 |
|
(100.0 |
) |
Cash distribution per common share from net investment income |
|
0.28 |
|
0.19 |
|
0.09 |
|
47.4 |
|
Cash distribution per common share from net realized gains(C) |
|
0.02 |
|
0.03 |
|
(0.01 |
) |
(33.3 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted-average yield on interest-bearing investments |
|
11.8 |
|
12.4 |
|
(0.6 |
) |
(4.8 |
) |
Total dollars invested |
|
$ |
300 |
|
$ |
50,145 |
|
$ |
(49,845 |
) |
(99.4 |
) |
Total dollars repaid and collected from sales |
|
620 |
|
2,943 |
|
(2,323 |
) |
(78.9 |
) |
|
|
|
|
|
|
|
|
|
|
As of: |
|
|
|
|
|
|
|
|
|
Total investments, at fair value |
|
$ |
561,342 |
|
$ |
565,924 |
|
$ |
(4,582 |
) |
(0.8 |
)% |
Fair value, as a percent of cost |
|
92.0 |
% |
92.8 |
% |
(0.8 |
)% |
(0.9 |
) |
Net assets |
|
$ |
360,869 |
|
$ |
369,031 |
|
$ |
(8,162 |
) |
(2.2 |
) |
Net asset value per common share |
|
10.87 |
|
11.17 |
|
(0.30 |
) |
(2.7 |
) |
Number of portfolio companies |
|
28 |
|
28 |
|
— |
|
— |
|
(A) |
|
Inclusive of $(0.8) million, or $(0.02) per weighted-average
common share, and $(8.4) million, or $(0.26) per weighted-average
common share, of capital gains-based incentive fees reversed during
the three months ended June 30, 2020 and March 31, 2020,
respectively. These fees were accrued/(reversed) 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. |
Highlights for the Quarter: During the
quarter ended June 30, 2020, the following significant events
occurred:
- Distributions and Dividends:
- Paid the following monthly cash distributions to common
stockholders and dividends to preferred stockholders for each of
April, May, and June 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 a $0.09 per common share supplemental distribution in June
2020.
- At-the-market (“ATM”) program activity:
- Sold 155,560 shares of our common stock under our Common Stock
ATM Program with Wedbush Securities, Inc. (“Wedbush”) at a
weighted-average gross price of $11.39 per share and raised
approximately $1.7 million in net proceeds. These sales were above
our then current estimated NAV per share.
- Sold 95,475 shares of our Series E Term Preferred Stock under
our Series E ATM Program with Wedbush with a total liquidation
preference of $2.4 million and raised approximately $2.3 million in
net proceeds.
First Quarter Results: Net
investment income for the quarters ended June 30, 2020 and March
31, 2020 was $4.2 million, or $0.13 per weighted-average common
share, and $14.8 million, or $0.45 per weighted-average common
share, respectively. This decrease was primarily a result of an
increase in total expenses, net of credits as well as a decrease in
total investment income, quarter over quarter.
Total investment income during the quarters ended June 30, 2020
and March 31, 2020 was $10.7 million and $12.0 million,
respectively. The quarter over quarter decrease was due to a $0.9
million decrease in interest income, primarily due to placing one
investment on non-accrual status in the current quarter, as well as
a $0.4 million decrease in success fee income, the timing of which
can be variable.
Total expenses, net of credits, during the quarters ended June
30, 2020 and March 31, 2020, were $6.5 million and $(2.8) million,
respectively. The quarter over quarter increase was primarily a
result of a $0.8 million reversal of previously accrued capital
gains-based incentive fees due to the net impact of realized and
unrealized gains and losses in the current quarter compared to an
$8.4 million reversal in the prior quarter and a $1.1 million
reduction of credits to fees from the Adviser. Remaining expenses
were relatively consistent quarter over quarter, with a slight
increase primarily due to higher tax and stockholder expenses.
Net asset value per common share as of June 30, 2020 decreased
to $10.87, compared to $11.17 as of March 31, 2020. The quarter
over quarter decrease was primarily due to $9.9 million, or $0.30
per common share, of distributions paid to common shareholders, and
$4.9 million, or $0.15 per common share, of net unrealized
depreciation of investments, partially offset by $4.2 million, or
$0.13 per common share, of net investment income and $0.8 million,
or $0.02 per common share, of net realized gains on
investments.
Subsequent Events: After June 30, 2020,
the following significant events occurred:
- Investment Activity: In July 2020, we invested
$46.9 million in Mason West, LLC (“Mason West”) through a
combination of secured first lien debt and preferred equity. Mason
West, headquartered in Placentia, California, is a provider of
engineered seismic restraint and vibration isolation
solutions.
- ATM program activity: Subsequent to June 30,
2020 and through July 20, 2020, we sold 1,802 shares of our Series
E Term Preferred Stock under our Series E ATM Program with Wedbush
with a total liquidation preference of $45 thousand and raised
approximately $43 thousand in net proceeds.
- Distributions and dividends: In July 2020, 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:
Record Date |
|
Payment Date |
|
Distribution per Common Share |
|
Dividend perShare
ofSeries D Term Preferred Stock |
|
Dividend perShare
ofSeries E Term Preferred Stock |
|
July 24, 2020 |
|
July 31, 2020 |
|
$ |
0.07 |
|
$ |
0.13020833 |
|
$ |
0.13281250 |
|
August 24, 2020 |
|
August 31, 2020 |
|
0.07 |
|
0.13020833 |
|
0.13281250 |
|
September 23, 2020 |
|
September 30, 2020 |
|
0.07 |
|
0.13020833 |
|
0.13281250 |
|
|
|
Total for the Quarter: |
|
$ |
0.21 |
|
$ |
0.39062499 |
|
$ |
0.39843750 |
|
- COVID-19 Impact: We continue to closely
monitor and work with our portfolio companies to navigate the
significant challenges created by the 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):
|
|
For the quarter ended |
|
|
|
June 30, 2020 |
|
March 31, 2020 |
|
|
|
Amount |
|
Per Share Amount |
|
Amount |
|
Per ShareAmount |
|
Net investment income |
|
$ |
4,173 |
|
$ |
0.13 |
|
$ |
14,766 |
|
$ |
0.45 |
|
Capital gains-based incentive fee
(reversal) |
|
|
(754 |
) |
|
(0.02 |
) |
|
(8,422 |
) |
|
(0.26 |
) |
Adjusted net investment
income |
|
$ |
3,419 |
|
$ |
0.11 |
|
$ |
6,344 |
|
$ |
0.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, July 29, 2020,
at 8:30 a.m. EDT. Please call (833) 519-1256 and enter conference
number 5383517 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 August 5, 2020. To hear
the replay, please dial (855) 859-2056 and use the playback
conference number 5383517. 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
September 29, 2020.
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 June 30, 2020, including
the notes to the consolidated financial statements contained
therein.
Source: Gladstone Investment Corporation
Investor Relations Inquiries:
Please visit ir.gladstoneinvestment.com. or +1-703-287-5893.
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