PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents Gladstone Capital Corporation's unaudited consolidated financial statements, highlighting a **$21.25** NAV per share, **$43.2 million** net increase in net assets, and **$751.3 million** investment portfolio fair value [Consolidated Statements of Assets and Liabilities](index=4&type=section&id=Consolidated%20Statements%20of%20Assets%20and%20Liabilities) Gladstone Capital's total assets decreased to **$780.2 million** as of June 30, 2025, while total net assets increased to **$474.5 million**, with NAV per share rising to **$21.25** Consolidated Balance Sheet Highlights (in thousands, except per share data) | Metric | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total Investments, at fair value | $751,260 | $796,260 | | Total Assets | $780,198 | $812,468 | | Total Liabilities | $291,227 | $333,727 | | Total Net Assets | $474,454 | $470,895 | | **Net Asset Value Per Common Share** | **$21.25** | **$21.18** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Total investment income for the three months ended June 30, 2025, was **$21.7 million**, with net investment income at **$11.3 million** and a **$43.2 million** net increase in net assets for the nine-month period Key Operating Results (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Investment Income | $21,657 | $25,689 | $65,186 | $72,907 | | Total Expenses, net of credits | $10,363 | $13,296 | $31,423 | $37,803 | | **Net Investment Income** | **$11,294** | **$12,393** | **$33,763** | **$35,104** | | Net Realized and Unrealized Gain (Loss) | ($3,605) | $6,751 | $10,060 | $27,681 | | **Net Increase in Net Assets** | **$7,448** | **$19,056** | **$43,220** | **$62,689** | | Net Investment Income Per Share | $0.50 | $0.57 | $1.50 | $1.61 | | Net Increase in Net Assets Per Share | $0.33 | $0.88 | $1.93 | $2.88 | [Consolidated Schedules of Investments](index=8&type=section&id=Consolidated%20Schedules%20of%20Investments) The investment portfolio's fair value was **$751.3 million** as of June 30, 2025, primarily comprising **70.4%** secured first lien debt, with Healthcare, Education, and Childcare as the largest industry concentration at **36.3%** Investment Portfolio Composition by Type (at Fair Value) | Security Type | June 30, 2025 (%) | September 30, 2024 (%) | | :--- | :--- | :--- | | Secured first lien debt | 70.4% | 69.7% | | Secured second lien debt | 19.2% | 14.3% | | Unsecured debt | 0.1% | 0.0% | | Preferred equity | 3.4% | 3.9% | | Common equity/equivalents | 6.9% | 12.1% | | **Total** | **100.0%** | **100.0%** | Top 5 Industry Concentrations (at Fair Value, June 30, 2025) | Industry Classification | Percentage of Total Investments | | :--- | :--- | | Healthcare, Education, and Childcare | 36.3% | | Diversified/Conglomerate Manufacturing | 23.2% | | Diversified/Conglomerate Service | 14.7% | | Beverage, Food, and Tobacco | 7.5% | | Automobile | 3.6% | - As of June 30, 2025, three portfolio company loans were on non-accrual status: B+T Group Acquisition, Inc., Edge Adhesives Holdings, Inc., and WB Xcel Holdings, LLC. These loans had a combined cost basis of **$28.8 million** (4.1% of total debt cost) and a fair value of **$11.5 million** (1.7% of total debt fair value)[66](index=66&type=chunk) [Notes to Consolidated Financial Statements](index=20&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes cover accounting policies, BDC/RIC status, Level 3 investment valuation, related-party transactions, credit facilities, and **$1.89** per share distributions, with **$94.0 million** in subsequent investments - The company is externally managed by Gladstone Management Corporation (the "Adviser") and receives administrative services from Gladstone Administration, LLC (the "Administrator"), both of which are affiliates[49](index=49&type=chunk) - As of June 30, 2025, all investments were valued using **Level 3 inputs**, except for two fund investments valued at NAV as a practical expedient[56](index=56&type=chunk)[76](index=76&type=chunk) - For the nine months ended June 30, 2025, the company paid distributions of **$1.89 per common share**, including a supplemental distribution of **$0.40 per share** in December 2024[155](index=155&type=chunk) - Subsequent to quarter-end, in July and August 2025, the company made new and follow-on investments totaling approximately **$94.0 million** and had one investment pay off at par[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, portfolio activity, and liquidity, noting **$270.1 million** invested, a **$61.7 million** net realized gain, and **$320.0 million** credit facility availability [Results of Operations](index=53&type=section&id=Results%20of%20Operations) Net investment income decreased to **$11.3 million** for the quarter, while a **$61.7 million** net realized gain for the nine months was offset by **$51.8 million** in net unrealized depreciation Comparison of Operating Results (in thousands) | Metric | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Investment Income | $65,186 | $72,907 | | Total Expenses, net of credits | $31,423 | $37,803 | | **Net Investment Income** | **$33,763** | **$35,104** | | Net Realized Gain on Investments | $61,718 | $1,895 | | Net Unrealized (Depreciation) Appreciation | ($51,840) | $21,936 | - The decrease in interest income for the nine months ended June 30, 2025 was driven by a lower weighted average yield on the investment portfolio (**12.8% vs 13.9% YoY**)[205](index=205&type=chunk) - The net realized gain of **$61.7 million** for the nine months ended June 30, 2025 was primarily driven by a **$59.3 million** gain on the sale of the investment in Antenna Research Associates, Inc.[214](index=214&type=chunk) - Net unrealized depreciation of **$51.8 million** for the nine months ended June 30, 2025 was primarily due to the reversal of previously recognized unrealized appreciation on the exited investment in Antenna Research Associates, Inc.[216](index=216&type=chunk) [Liquidity and Capital Resources](index=62&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is supported by a **$320.0 million** credit facility with **$277.7 million** availability, **$257.0 million** in notes payable, and **267.9%** asset coverage for senior debt Capital Resources as of June 30, 2025 (in millions) | Source | Amount | | :--- | :--- | | Credit Facility Commitment | $320.0 | | Credit Facility Outstanding | $27.5 | | Credit Facility Availability | $277.7 | | Notes Payable Outstanding | $257.0 | - As of June 30, 2025, the company was in compliance with all financial covenants, including a net worth of **$727.0 million** (vs. **$500.0 million** required) and asset coverage of **267.9%** on senior debt (vs. **150%** required)[240](index=240&type=chunk) - The company has an effective shelf registration statement permitting the issuance of up to **$700.0 million** in securities, with **$681.3 million** remaining available as of June 30, 2025[231](index=231&type=chunk) - Unfunded commitments to portfolio companies, including lines of credit and delayed draw term loans, totaled **$48.7 million** as of June 30, 2025[249](index=249&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=69&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Interest rate risk is the primary market exposure, with **90.1%** of the debt investment portfolio consisting of variable-rate loans indexed to SOFR - The company's primary market risk exposure is to interest rate fluctuations, as it borrows money to make investments[260](index=260&type=chunk) - As of June 30, 2025, **90.1%** of the debt portfolio consisted of variable-rate investments, while **9.9%** were fixed-rate[261](index=261&type=chunk) [Item 4. Controls and Procedures](index=69&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[262](index=262&type=chunk) - There were no changes in internal controls during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[263](index=263&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=70&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently subject to any material legal proceedings, nor is it aware of any pending or threatened actions - As of the filing date, the company is not a party to any material legal proceedings[264](index=264&type=chunk) [Item 1A. Risk Factors](index=70&type=section&id=Item%201A.%20Risk%20Factors) Supplements existing risk factors with a new disclosure on the potential adverse effects of tariffs on the company and its portfolio companies - A new risk factor was added regarding the potential negative impact of tariffs on the company and its portfolio companies' operations[265](index=265&type=chunk)[266](index=266&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=70&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or issuer purchases of equity securities occurred during the reporting period - There were no unregistered sales of equity securities or issuer repurchases during the reporting period[268](index=268&type=chunk)[269](index=269&type=chunk)

Group 1 - The stock has gained +117% over the last five years on the Nasdaq, indicating strong performance [1] - Mr. Mavroudis is a professional portfolio manager with expertise in risk management and financial market analysis [1] - The company, FAST FINANCE Investment Services, is registered with the Hellenic Capital Market Commission and offers a range of investment services [1] Group 2 - Mr. Mavroudis has successfully navigated major crises, including the COVID-19 pandemic [1] - He holds multiple advanced degrees and certifications, enhancing his credibility in the investment field [1] - The company aims to engage with a community of investors through platforms like Seeking Alpha, promoting knowledge sharing [1]

Group 1 - Gladstone Commercial Corporation (GLAD) has made a significant acquisition to expand its industrial portfolio, indicating a strategic focus on this sector [1] - The company is actively pursuing growth opportunities within the industrial real estate investment trust (REIT) space, which appears to be a sensible strategy [1] Group 2 - The investing group "Value In Corporate Events" provides insights on major corporate events such as IPOs, mergers & acquisitions, and earnings reports, aiming to identify the best investment opportunities [2] - The group covers approximately 10 major events each month, focusing on capitalizing on changes in corporate capital allocation [2]

Core Insights - The article emphasizes the importance of a hybrid investment strategy that combines classic dividend growth stocks with Business Development Companies, REITs, and Closed End Funds to enhance investment income while achieving total returns comparable to traditional index funds [1]. Investment Strategy - The investment approach focuses on high-quality dividend stocks and assets that provide long-term growth potential, which can significantly contribute to income generation [1]. - A balanced portfolio that includes both growth and income-generating assets can lead to efficient investment income while maintaining a total return aligned with the S&P [1].

Financial Data and Key Metrics Changes - Fundings totaled $46 million, with exits and repayments at $81 million, resulting in net originations of negative $35 million [6] - Interest income remained unchanged at $21.3 million, while the weighted average portfolio yield fell to 12.6% due to a decline in SOFR rates [7][12] - Net investment income was $11.2 million, with net realized gains of $7.7 million for the quarter [8][13] - Total assets decreased to $777 million, with net assets declining to $478 million [13][14] - NAV per share fell from $21.51 to $21.41, reflecting unrealized depreciation [14] Business Line Data and Key Metrics Changes - The portfolio turnover did not materially impact the investment mix, with senior debt representing 71% of the fair value of the portfolio [8] - Non-earning asset investments remained unchanged at four companies totaling $53.7 million at cost [9] Market Data and Key Metrics Changes - The company experienced a surge in portfolio liquidity events totaling $289 million, representing approximately 36% of the portfolio exited [10] - The current pipeline of expected fundings is healthy, with anticipated growth in the portfolio [10] Company Strategy and Development Direction - The company continues to focus on investing in growth-oriented lower middle market businesses with strong management [18] - The strategy includes supporting midsized private equity funds in buyouts and growth opportunities [18] - The company aims to increase leverage to reach $1 billion in total assets under management [57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's resilience despite market volatility and widening credit spreads [21][22] - The company is optimistic about the performance of its investments in sectors like precision manufacturing and lab testing, expecting improvements over the year [46][51] - Management noted that domestic-focused businesses are benefiting from changes in supply chains due to tariffs [25][26] Other Important Information - Monthly distributions for May and June will be $0.165 per common share, with an annual run rate of $1.98 per share [15] - The company maintains a conservative leverage position with debt at 62.5% of NAV [11] Q&A Session Summary Question: How do you see the portfolio and NAV performing with both broadly syndicated loan and private credit spreads widening in April? - Management indicated that they do not have syndicated loans and expect minimal degradation in value due to their portfolio's leverage profile and yield [21][22] Question: How do you see SeaLink and RPM freight performing as tariffs impact shipping volumes? - Management noted that domestically focused companies are adapting well to changes, with RPM's business actually up due to their responsiveness [25][26] Question: How much direct exposure is there to tariffs within the manufacturing segment? - Management highlighted that their investments in domestic manufacturing are performing well, with some companies expanding capacity despite facing tariff issues [28][30] Question: Is the EG's restructuring going to generate a realized loss? - Management anticipates a very small loss from the restructuring, with a significant equity investment going forward [34] Question: Can you provide an update on the pipeline and its size relative to three months ago? - Management reported a healthy backlog with 8 to 10 deals in advanced stages, potentially totaling $100 million to $150 million [39][40] Question: Do you have any exposure to government contracts given potential cuts? - Management stated they do not have significant exposure to government contracts, focusing instead on defense-oriented suppliers and healthcare [42][45] Question: Where do you see leverage going for the rest of the year? - Management aims to increase leverage towards 90% to 100% over the next few quarters, working to reach $1 billion in total assets [57][58]

Financial Data and Key Metrics Changes - Fundings totaled $46 million, with exits and repayments at $81 million, resulting in net originations of negative $35 million [6] - Interest income remained unchanged at $21.3 million, while the weighted average portfolio yield fell to 12.6% due to a decline in SOFR rates [7][12] - Net investment income was $11.2 million, with net realized gains of $7.7 million for the quarter [8][13] - Total assets decreased to $777 million, with net assets declining to $478 million [13][14] - NAV per share fell from $21.51 to $21.41, reflecting unrealized depreciation [14] Business Line Data and Key Metrics Changes - The portfolio turnover did not materially impact the investment mix, with senior debt representing 71% of the fair value of the portfolio [8] - Non-earning asset investments remained unchanged at four companies totaling $53.7 million at cost [9] Market Data and Key Metrics Changes - The company experienced a healthy pipeline of expected fundings, with a total of $289 million in portfolio liquidity events since September [10] - The current pipeline includes 8 to 10 deals in advanced stages, potentially totaling $100 million to $150 million [39] Company Strategy and Development Direction - The company continues to focus on investing in growth-oriented lower middle market businesses with strong management [18] - The strategy includes supporting midsized private equity funds in buyouts and growth opportunities [18] - The company aims to increase leverage towards $1 billion in total assets under management while maintaining yield and leverage discipline [58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's resilience despite market volatility and widening credit spreads [22] - The company is optimistic about the performance of its investments in sectors like precision manufacturing and lab testing, expecting improvements over the year [46][51] - Management noted that domestic-focused businesses are benefiting from supply chain shifts due to tariffs [26][30] Other Important Information - Monthly distributions for May and June are set at $0.165 per common share, with an annual run rate of $1.98 per share, yielding approximately 7.8% [15] - The company has absorbed much of the anticipated surge in portfolio liquidity events, indicating a strong position for future growth [10] Q&A Session Summary Question: How do you see the portfolio and NAV performing with both broadly syndicated loan and private credit spreads widening in April? - Management indicated that they do not have syndicated loans and expect minimal degradation in value due to their portfolio's leverage profile and yield [21][22] Question: How do you see SeaLink and RPM freight performing as tariffs impact shipping volumes? - Management noted that domestically focused companies are adapting well to changes, with RPM's business actually up due to their responsiveness [25][26] Question: Is the EG's restructuring going to generate a realized loss for you? - Management anticipates a very small loss from the restructuring, with a significant equity investment going forward [34] Question: Can you provide an update on the pipeline and its size relative to three months ago? - Management reported a healthy backlog with 8 to 10 deals in advanced stages, potentially totaling $100 million to $150 million [39] Question: Do you have any exposure to government contracts given potential cuts? - Management stated they do not have significant exposure to government contracts, focusing instead on defense-oriented suppliers and healthcare [43][45] Question: Where do you see leverage going for the rest of the year? - Management aims to increase leverage towards 90% to 100% over the next few quarters, working to achieve $1 billion in total assets under management [58]

Financial Data and Key Metrics Changes - Fundings totaled $46 million, with exits and repayments at $81 million, resulting in net originations of negative $35 million [5] - Interest income remained unchanged at $21.3 million, while the weighted average portfolio yield declined to 12.6% due to a 36 basis point drop in average SOFR rates [6][10] - Net investment income was $11.2 million, unchanged from the previous quarter, with net realized gains of $7.7 million [6][11] - Total assets decreased to $777 million, with net assets declining by $2.3 million to $478 million, and NAV per share fell from $21.51 to $21.41 [11][12] Business Line Data and Key Metrics Changes - The yielding debt investments decreased by $20 million compared to the prior quarter end [5] - Non-earning asset investments remained unchanged at four companies totaling $53.7 million at cost [7] - The portfolio turnover did not materially impact the investment mix, with senior debt representing 71% of the fair value of the portfolio [6] Market Data and Key Metrics Changes - The company experienced a surge in portfolio liquidity events totaling $289 million, representing approximately 36% of the portfolio exited [8] - The current pipeline of expected fundings is healthy, expected to outpace anticipated repayments [8] Company Strategy and Development Direction - The company continues to focus on investing in growth-oriented lower middle market businesses with strong management [17] - The strategy includes supporting midsized private equity funds in buyouts and growth opportunities [17] - The company aims to increase leverage towards $1 billion in total assets under management while maintaining yield and leverage discipline [56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's resilience despite market volatility and widening credit spreads [21] - The company is optimistic about the performance of domestically focused businesses amid tariff impacts, noting advantages for responsive domestic service providers [24][30] - Management highlighted a healthy backlog of deals and a focus on domestic manufacturing to mitigate tariff risks [52] Other Important Information - Monthly distributions for May and June will be $0.165 per common share, with an annual run rate yield of about 7.8% [12][13] - The company completed the restructuring of its investment in EG's, restoring most exposure to earning asset status [7] Q&A Session Summary Question: How do you see the portfolio and NAV performing with both broadly syndicated loan and private credit spreads widening in April? - Management noted that they do not have syndicated loans and that their portfolio spreads remain favorable compared to the market [20][21] Question: How do you see SeaLink and RPM freight performing as tariffs impact shipping volumes? - Management indicated that domestically focused companies are adapting well to changes, with some businesses experiencing growth [23][24] Question: Is the EG's restructuring going to generate a realized loss for you? - Management anticipates a very small loss from the restructuring, with significant equity investment going forward [31] Question: Can you provide an update on the pipeline and its size relative to three months ago? - Management reported a healthy backlog with 8 to 10 deals in advanced stages, totaling approximately $100 million to $150 million [37] Question: Where do you see leverage going for the rest of the year? - Management aims to increase leverage towards 90% to 100% over the next few quarters, targeting $1 billion in total assets under management [56][60]

Financial Results - Net Investment Income (NII) per share was $0.50[7] - Net Asset Value (NAV) per share was $21.41, a decrease of $0.10 from the prior quarter-end[7] - Last Twelve Months (LTM) Return on Equity (ROE) was 18.6% per GAAP and 9.8% on net investment income[7] - Monthly dividends per share were $0.165, resulting in an annualized dividend yield on NAV of 9.25%[7] Portfolio Composition - Total investments at fair value amounted to $762.6 million, spread across 51 companies[7] - First-lien debt accounted for 71% of the portfolio, with 90% in secured loans[7] - The weighted average yield on debt investments decreased to 12.6% from 13.1% due to lower SOFR rates[7] - Four obligors were on non-accrual, representing $29.8 million or 4.3% of debt investments at fair value[7] Origination Activity - New investments totaled $45.6 million, including $38.3 million in two new portfolio companies[21] - Portfolio exits and prepayments reached $81.3 million, resulting in net originations of ($35.7) million[21] Capital Base and Liquidity - Outstanding debt balance was $280 million, with a quarter-end debt-to-equity ratio of 0.60x[7] - Current investment capacity stood at $251 million under undrawn committed bank lines[7]

Group 1 - The article discusses the performance of Gladstone Capital (NASDAQ: GLAD) and the impact of interest rates on its net investment income, suggesting a pause in adding to GLAD positions due to concerns over declining interest rates [1] - The author emphasizes a long-term investment strategy focused on stocks with strong growth potential and stable dividend yields, highlighting the importance of patience in allowing investments to compound over time [1] - The focus is primarily on financial stocks, including banks and Business Development Companies (BDCs), which are selected based on strong fundamentals and a consistent history of dividend payouts [1]

Group 1: Earnings Performance - Gladstone Capital reported quarterly earnings of $0.50 per share, matching the Zacks Consensus Estimate, and showing an increase from $0.25 per share a year ago [1] - The company posted revenues of $21.57 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 5.95%, and down from $24 million year-over-year [2] - Over the last four quarters, Gladstone Capital has surpassed consensus EPS estimates only once [1][2] Group 2: Stock Performance and Outlook - Gladstone Capital shares have declined approximately 10.9% since the beginning of the year, compared to a decline of 3.9% for the S&P 500 [3] - The company's earnings outlook is mixed, with current consensus EPS estimates at $0.50 for the coming quarter and $2.01 for the current fiscal year [7] - The Zacks Rank for Gladstone Capital is currently 3 (Hold), indicating expected performance in line with the market in the near future [6] Group 3: Industry Context - The Financial - SBIC & Commercial Industry, to which Gladstone Capital belongs, is currently ranked in the bottom 45% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Gladstone Capital's stock performance [5]