Business Development Companies have become increasingly popular during this period of elevated interest rates because of their ability to generate a higher amount of income. However, the higher rate environment has also revealed which BDCs are more vulnerable to unfavorable shiftsFinancial analyst by day and a seasoned investor by passion, I've been involved in the world of investing for over 15 years and honed my skills in analyzing lucrative opportunities within the market.I specialize in uncovering high ...

Financial Data and Key Metrics Changes - For the fiscal year ended 03/31/2025, the company generated adjusted net investment income (NII) of $0.97 per share, covering the annual dividend of $0.96 per share [5][6] - The total fair value of the portfolio increased to $979 million from approximately $921 million at the prior year end, although it was slightly lower than the $1.1 billion reported at the end of the last quarter [6][9] - Total investment income for the fiscal year was $93.7 million, up from $87.3 million in the prior year, primarily due to increases in dividend and success fee income [13][14] Business Line Data and Key Metrics Changes - The company invested a total of $221 million during the year, an increase from $184 million in the prior year, which included investments in four new portfolio companies and add-on investments [7][8] - The company maintained a monthly distribution to shareholders of $0.08 per share, aggregating to $1.66 per share for the year, including supplemental distributions [8][20] Market Data and Key Metrics Changes - The company noted good liquidity in the M&A market, although it is a competitive environment impacted by tariffs affecting cost, customer demand, and supply chain dynamics [9][10] - The company is cautiously optimistic about new acquisitions, expecting to close two new acquisitions shortly [10][11] Company Strategy and Development Direction - The company aims to continue its buyout strategy while being cautious in assessing risks related to tariffs and their impact on portfolio companies [10][12] - The management team has added experienced talent to support portfolio growth and manage the current portfolio of 25 operating companies [7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the current portfolio's performance and the potential for continued earnings and distributions despite economic uncertainties [12][19] - The recent pause on tariffs was seen as a relief, but management remains cautious about the long-term implications [11][12] Other Important Information - The company ended the fiscal year with $55.3 million in spillover, sufficient to cover current monthly distributions and the recently declared supplemental distribution [19][55] - The company has four portfolio companies on non-accrual status, with three of them being profitable and showing improvement [17][32] Q&A Session Summary Question: How much of the portfolio has exposure to tariff risk? - Management indicated that most companies have some exposure, particularly those producing in China, but they are not overly concerned as they have been proactive in managing inventory and supply chains [25][26] Question: What is the exposure to lower-income customers in the consumer sector? - Management stated that the consumer products in the portfolio are not primarily targeted at lower-income customers, and the impact of tariff costs is relatively small [28][30] Question: Update on non-accrual companies, specifically Hobbs? - Management remains optimistic about Hobbs and expects it to return to accrual status by the end of the year, with improvements in profitability noted [31][32] Question: What is the rationale for the dividend recap with Educators Resource? - The dividend recap was seen as a reinvestment decision, allowing the management team to gain liquidity while the company continues to perform well [49][52] Question: Current spillover amount? - The company ended the year with $55.3 million in spillover, which covers the current monthly distribution and the supplemental distribution to be paid in June [54][55]

分组1 - Gladstone Investment (GAIN) reported quarterly earnings of $0.26 per share, exceeding the Zacks Consensus Estimate of $0.23 per share, and showing an increase from $0.24 per share a year ago, resulting in an earnings surprise of 13.04% [1] - The company posted revenues of $27.55 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 11.19%, compared to $23.65 million in the same quarter last year [2] - The stock has increased approximately 6% since the beginning of the year, while the S&P 500 has declined by 0.6% [3] 分组2 - The current consensus EPS estimate for the upcoming quarter is $0.23 on revenues of $25.43 million, and for the current fiscal year, it is $0.93 on revenues of $99.56 million [7] - The Zacks Industry Rank for Financial - SBIC & Commercial Industry is in the bottom 28% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Chicago Atlantic BDC, Inc., another company in the same industry, is expected to report quarterly earnings of $0.34 per share, reflecting a significant year-over-year change of +3500% [9]

Investment Income - Total investment income for the fourth quarter ended March 31, 2025, was $27.5 million, a 28.9% increase from $21.4 million in the previous quarter[2] - Net investment income for the fourth quarter was $7.2 million, or $0.20 per weighted-average common share, compared to $1.2 million, or $0.03 per weighted-average common share in the prior quarter[8] - Total investment income for the fiscal year ended March 31, 2025, was $93.7 million, a 7.3% increase from $87.3 million in the previous year[15] - Net investment income for the fiscal year was $28.1 million, or $0.76 per weighted-average common share, compared to $21.8 million, or $0.63 per weighted-average common share in the prior year[14] - Adjusted net investment income for the year ended March 31, 2025, was $35.5 million, or $0.97 per share, compared to $34.5 million, or $1.00 per share, for the previous year[20] Cash Distribution - Cash distribution per common share from net investment income was $0.64, a 40.7% decrease from $1.08 in the previous year[3] - The company paid a monthly distribution of $0.08 per common share from April 2024 to March 2025, along with a supplemental distribution of $0.70 per common share in October 2024[18] - The company declared a total distribution of $0.78 per common share for the quarter ending June 30, 2025, including a supplemental distribution of $0.54 per share[19] Investment Activity - Total dollars invested during the fiscal year was $221.2 million, a 20.3% increase from $183.9 million in the previous year[3] - Total dollars repaid and/or collected from sales and recapitalization of investments for the fiscal year was $199.6 million, a 148.8% increase from $80.2 million in the previous year[3] - The company exited its investment in Nocturne Luxury Villas, resulting in a realized gain of $19.8 million and repayment of $85.6 million at par[12] - The company raised approximately $2.0 million through the sale of 148,714 shares under its ATM program at a weighted-average gross price of $13.64 per share[18] Asset Value - Net asset value per common share as of March 31, 2025, was $13.55, up from $13.30 as of December 31, 2024[11] - As of March 31, 2025, the net asset value per common share was $13.55, an increase from $13.43 as of March 31, 2024, driven by $63.2 million in realized gains and $28.1 million in net investment income[17] Credit Facility - The company amended its credit facility, increasing the size from $200.0 million to $270.0 million[8] - The credit facility was amended to increase its size from $200.0 million to $270.0 million[18] Share Information - The weighted-average shares of common stock outstanding for the year ended March 31, 2025, were 36,735,218[20] - The company issued publicly-traded 7.875% Notes due 2030 with a total principal amount of $126.5 million[18] Non-GAAP Measures - The company emphasizes that Adjusted net investment income is a non-GAAP financial measure and may not be comparable to similar measures presented by other companies[21]

Investment Portfolio Composition - As of March 31, 2025, the investment portfolio consisted of 73.3% in debt investments and 26.7% in equity investments, at cost[21] - The total fair value of the investment portfolio was $979.3 million, with the five largest investments representing $401.7 million, or 41.0%, of the total[30] - The investment strategy includes a target of approximately 75% in debt securities and 25% in equity securities over time[21] - The investment portfolio included investments in 25 portfolio companies across 16 different industries[30] - Secured first lien debt accounted for 62.2% of total investments at fair value in 2025, compared to 52.5% in 2024, indicating a shift towards more secured debt[33] - Preferred equity increased to 30.9% of total investments at fair value in 2025, up from 23.2% in 2024, reflecting a strategic focus on equity investments[33] - The aerospace and defense sector saw a significant increase in fair value investments, rising to 10.9% in 2025 from 3.2% in 2024, highlighting a shift in industry focus[33] - The Midwest region's investments grew to 23.2% of total investments in 2025, up from 15.4% in 2024, indicating a geographic expansion strategy[33] Investment Strategy and Philosophy - The company focuses on lower middle market private businesses with annual EBITDA between $4 million and $15 million[22] - The company seeks to achieve a high level of current income and capital gains through investments in secured debt securities and equity[29] - The company emphasizes a disciplined, value- and income-oriented investment philosophy, focusing on minimizing capital loss while seeking capital appreciation[46] - Extensive due diligence is conducted, including management assessments and market analyses, to ensure alignment with investment criteria[36] - The investment committee comprises experienced professionals with over 30 years in middle market investments, enhancing decision-making capabilities[44] Financial Performance and Incentives - As of March 31, 2025, total investments reached $979.32 million, up from $920.50 million as of March 31, 2024, representing a growth of 6.4%[33] - For the fiscal year ended March 31, 2025, capital gains-based incentive fees of $4.9 million were contractually due and paid to the Adviser, compared to $1.1 million for the fiscal year ended March 31, 2024[74] - The income-based incentive fee is triggered if quarterly net investment income exceeds 1.75% of net assets, with a further tier at 2.1875%[67] - The capital gains-based incentive fee is calculated as 20.0% of realized capital gains, less any realized capital losses and unrealized depreciation[72] Regulatory and Compliance Matters - The company aims to retain its status as a BDC and RIC under applicable regulations[32] - The company must distribute at least 90% of its taxable ordinary income to qualify as a RIC[82] - If the company fails to meet RIC requirements, it would be subject to U.S. federal income tax on all taxable income at the regular corporate income tax rate[86] - The company is regulated as a BDC under the 1940 Act, which imposes restrictions on transactions and requires a majority of independent directors[96] - The company must maintain significant managerial assistance to portfolio companies to count them as qualifying assets[103] Risks and Challenges - The company faces risks related to market conditions, interest rate fluctuations, and the lack of liquidity in privately held investments[104] - Changes in interest rates could negatively impact the rate of return on invested capital, net investment income, NAV, and the market price of securities[118] - The company faces competitive pressure in the BDC and investment company marketplace, which could lead to reduced yields on investments[125] - Economic downturns may have a material adverse effect on Lower Middle Market portfolio companies, impacting their ability to meet debt service requirements[128] - The company may experience difficulties in raising capital due to volatility in capital markets, which could adversely affect the valuations of its investments[114] Management and Operational Structure - The company does not currently have any employees and relies on 20 to 25 full-time employees from the Adviser and Administrator for its operations[107] - The Adviser provides significant managerial assistance to portfolio companies, which includes sourcing credit facilities and negotiating financial relationships[63] - The company is dependent on key management personnel, particularly David Gladstone and David Dullum, for future success[172] - The company has no employees and relies entirely on the Adviser for management, which poses risks if the Adviser discontinues operations or key personnel leave[173] Cybersecurity and Technology Risks - Cybersecurity risks may disrupt operations and negatively impact the company's financial condition and operating results[207] - The company emphasizes the critical importance of maintaining network security due to the storage of highly confidential financial models and portfolio company information[208] - Cyber incidents could lead to disrupted operations, misstated financial data, and increased cybersecurity costs, potentially impacting the company's financial results[208] - The company faces risks associated with artificial intelligence and machine learning technology, particularly from third-party service providers[209] Environmental, Social, and Governance (ESG) Considerations - Increasing public scrutiny regarding environmental, social, and governance (ESG) activities could affect the company's brand value and investor relationships[213] - New regulatory initiatives related to ESG could impose onerous compliance costs and affect the company's profitability[214]

Core Viewpoint - Gladstone Investment (GAIN) is anticipated to report a year-over-year decline in earnings despite an increase in revenues for the quarter ending March 2025, with the consensus outlook indicating a potential impact on its near-term stock price [1][2]. Earnings Expectations - The upcoming earnings report is expected to reveal quarterly earnings of $0.23 per share, reflecting a year-over-year decrease of 4.2%, while revenues are projected to be $24.78 million, an increase of 4.8% from the previous year [3]. - The consensus EPS estimate has been revised down by 1.43% over the last 30 days, indicating a bearish sentiment among analysts regarding the company's earnings prospects [4][10]. Earnings Surprise Prediction - The Zacks Earnings ESP model shows a negative Earnings ESP of -1.43%, suggesting that the Most Accurate Estimate is lower than the Zacks Consensus Estimate, complicating predictions of an earnings beat [11][10]. - The company currently holds a Zacks Rank of 3 (Hold), which further indicates uncertainty regarding the likelihood of surpassing the consensus EPS estimate [11]. Historical Performance - In the last reported quarter, Gladstone Investment was expected to post earnings of $0.24 per share but delivered only $0.23, resulting in a surprise of -4.17% [12]. - The company has not exceeded consensus EPS estimates in any of the last four quarters, highlighting a trend of underperformance [13]. Industry Comparison - In comparison, Morgan Stanley Direct Lending Fund (MSDL), another player in the Zacks Financial - SBIC & Commercial Industry, is expected to report earnings of $0.56 per share for the same quarter, reflecting a year-over-year decline of 11.1%, with revenues anticipated at $103.52 million, up 4.5% [17]. - Similar to Gladstone Investment, Morgan Stanley Direct Lending Fund has a negative Earnings ESP of -3.57% and a Zacks Rank of 3, making it difficult to predict an earnings beat [18].

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Company Overview - Gladstone Investment (GAIN) shares increased by 11% in the last trading session, closing at $13.06, with significantly higher trading volume compared to normal sessions [1] - The stock had previously experienced a 10% loss over the past four weeks [1] Market Influence - The sharp rally in Gladstone Investment shares was influenced by broad market strength following President Donald Trump's announcement of a 90-day suspension on tariffs for non-retaliating countries, which eased trade tensions and improved market sentiment [2] Earnings Expectations - Gladstone Investment is expected to report quarterly earnings of $0.24 per share, unchanged from the same quarter last year, with revenues projected at $24.57 million, reflecting a 3.9% increase year-over-year [3] - The consensus EPS estimate for the quarter has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [4] Industry Context - Gladstone Investment is part of the Zacks Financial - SBIC & Commercial Industry, where Morgan Stanley Direct Lending Fund (MSDL) also operates, closing the last trading session at $18.73, up 5.3%, but with a -11.4% return over the past month [4] - Morgan Stanley Direct Lending Fund has a consensus EPS estimate of $0.57 for the upcoming report, which is a -9.5% change from the previous year, and currently holds a Zacks Rank of 4 (Sell) [5]

Core Insights - Gladstone Investment (NASDAQ: GAIN) operates as a business development company focused on generating attractive total returns through a portfolio of debt investments [1] Group 1: Company Overview - GAIN distinguishes itself from other business development companies (BDCs) by having a significant allocation towards debt investments [1] - The company aims to create a hybrid investment strategy that combines growth and income, targeting high-quality dividend stocks along with other assets [1] Group 2: Investment Strategy - The investment approach includes a mix of Business Development Companies, Real Estate Investment Trusts (REITs), and Closed-End Funds to enhance investment income while achieving total returns comparable to traditional index funds [1] - The strategy is designed to provide a solid base of classic dividend growth stocks, which can lead to efficient income generation [1]

Core Insights - Gladstone Investment (GAIN) reported a revenue of $21.37 million for the quarter ended December 2024, which is a decrease of 7.4% compared to the same period last year [1] - The earnings per share (EPS) for the quarter was $0.23, down from $0.26 in the year-ago quarter, and below the consensus estimate of $0.24, resulting in an EPS surprise of -4.17% [1] - The reported revenue fell short of the Zacks Consensus Estimate of $23.08 million, leading to a revenue surprise of -7.41% [1] Financial Performance Metrics - Total interest income for the quarter was $20.53 million, which was below the average estimate of $21.54 million from two analysts [4] - Interest income from affiliate investments was reported at $5.41 million, compared to the average estimate of $6.05 million [4] - Interest income from cash and cash equivalents was $0.07 million, slightly above the average estimate of $0.06 million [4] - Interest income from non-control/non-affiliate investments was $15.04 million, which was also below the average estimate of $15.40 million [4] Stock Performance - Over the past month, shares of Gladstone Investment have returned +4.2%, which is slightly lower than the Zacks S&P 500 composite's +4.3% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating it may perform in line with the broader market in the near term [3]