Gladstone Capital (GLAD) - 2024 Q4 - Annual Results

Summary Financial Information This section provides a concise overview of the company's financial performance on both a quarterly and annual basis Quarterly Summary (Q4 2024 vs Q3 2024) Gladstone Capital Corporation reported decreased total investment income and net investment income for Q4 2024 compared to Q3 2024, while net assets from operations and net asset value per common share significantly increased Quarterly Financial Summary (Q4 2024 vs Q3 2024) | Metric | September 30, 2024 (Millions USD) | June 30, 2024 (Millions USD) | Change (Millions USD) | % Change | | :-------------------------------------------------------------------- | :-------------------------------- | :--------------------------- | :-------------------- | :------- | | Total investment income | $23.71 | $25.69 | $(1.98) | (7.7)% | | Total expenses, net of credits | $(12.76) | $(13.30) | $0.54 | (4.0)% | | Net investment income | $10.96 | $12.39 | $(1.43) | (11.6)% | | Net investment income per common share | $0.50 | $0.57 | $(0.07) | (12.3)% | | Cash distribution per common share | $0.50 | $0.50 | $0.00 | 0.0% | | Net realized gain (loss) | $0.21 | $3.32 | $(3.11) | (93.5)% | | Net unrealized appreciation (depreciation) | $20.77 | $3.44 | $17.33 | 504.4% | | Net increase (decrease) in net assets resulting from operations | $31.82 | $19.06 | $12.76 | 67.0% | | Weighted average yield on interest-bearing investments | 14.0% | 13.9% | 0.1% | 0.7% | | Total invested | $28.53 | $46.39 | $(17.86) | (38.5)% | | Total repayments and net proceeds | $12.64 | $86.42 | $(73.78) | (85.4)% | | Total investments, at fair value | $796.26 | $757.75 | $38.51 | 5.1% | | Fair value, as a percent of cost | 103.3% | 100.6% | 2.7% | 2.7% | | Net asset value per common share | $21.18 | $20.18 | $1.00 | 5.0% | Annual Summary (FY 2024 vs FY 2023) FY 2024 saw increased total investment income and expenses, leading to a healthy rise in net investment income and a significant increase in net assets from operations, primarily due to net unrealized appreciation Annual Financial Summary (FY 2024 vs FY 2023) | Metric | September 30, 2024 (Millions USD) | September 30, 2023 (Millions USD) | Change (Millions USD) | % Change | | :-------------------------------------------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------- | :------- | | Total investment income | $96.62 | $86.43 | $10.19 | 11.8% | | Total expenses, net of credits | $(50.56) | $(45.41) | $(5.15) | 11.3% | | Net investment income | $46.06 | $41.02 | $5.04 | 12.3% | | Net investment income per common share | $2.11 | $2.20 | $(0.09) | (4.1)% | | Cash distribution per common share | $1.98 | $1.89 | $0.09 | 4.8% | | Net realized gain (loss) | $5.96 | $12.66 | $(6.70) | (52.9)% | | Net unrealized appreciation (depreciation) | $42.70 | $(11.02) | $53.72 | (487.6)% | | Net increase (decrease) in net assets resulting from operations | $94.51 | $42.67 | $51.84 | 121.5% | | Weighted average yield on interest-bearing investments | 13.9% | 13.3% | 0.6% | 4.5% | | Total invested | $177.65 | $175.48 | $2.17 | 1.2% | | Total repayments and proceeds | $136.27 | $125.19 | $11.08 | 8.8% | | Total investments, at fair value | $796.26 | $704.82 | $91.44 | 13.0% | | Fair value as a percent of cost | 103.3% | 97.6% | 5.7% | 5.8% | | Net asset value per common share | $21.18 | $18.79 | $2.39 | 12.7% | Fourth Fiscal Quarter 2024 Performance This section details Gladstone Capital Corporation's financial and operational performance during the fourth fiscal quarter of 2024 Q4 2024 Highlights Key achievements for Q4 2024 include significant investments in existing portfolio companies, maintaining a strong secured first lien asset mix, and increasing credit facility availability - Invested $28.5 million in existing portfolio companies[4] - Secured first lien assets constitute over 70% of debt investments at cost, with a consistent weighted average yield of 14.0% on debt investments[4] - Increased committed credit facility amount by $25.0 million to $293.7 million, ending the quarter with over $200 million in availability[4] Q4 2024 Detailed Financial Results Q4 2024 saw a decline in total investment income and expenses, while net assets from operations significantly increased due to substantial net unrealized appreciation - Total investment income decreased by $2.0 million (7.7%) quarter-over-quarter, primarily due to a $2.2 million decrease in other income, which included a $1.1 million decrease in prepayment fee income and a $0.9 million decrease in dividend income[5] - Total expenses decreased by $0.5 million (4.0%) quarter-over-quarter, mainly due to a $0.5 million decrease in the net incentive fee[6] Q4 2024 Net Investment Income Summary | Metric | Q4 2024 (Millions USD) | Q3 2024 (Millions USD) | Change (Millions USD) | % Change | | :-------------------- | :--------------------- | :--------------------- | :-------------------- | :------- | | Net investment income | $11.0 | $12.4 | $(1.4) | (11.6)% | | Net investment income per share | $0.50 | $0.57 | $(0.07) | (12.3)% | - Net increase in net assets resulting from operations was $31.8 million ($1.46 per share), up from $19.1 million ($0.88 per share) in the prior quarter, primarily driven by $20.8 million of net unrealized appreciation[7] Fiscal Year Ended 2024 Performance This section provides a comprehensive overview of Gladstone Capital Corporation's financial results for the full fiscal year 2024 FY 2024 Detailed Financial Results FY 2024 saw increased total investment income and expenses, leading to a healthy rise in net investment income and a significant increase in net assets from operations, primarily due to net unrealized appreciation - Total investment income increased by $10.2 million year-over-year to $96.6 million, primarily due to a $10.3 million increase in interest income, driven by a 6.2% increase in the weighted average principal balance of interest-bearing investments and an increase in weighted average yield from 13.3% to 13.9%[8] - Expenses, net of credits, increased by $5.1 million (11.3%) year-over-year, mainly due to a $2.0 million increase in net base management fee, a $1.0 million increase in net incentive fee, and a $0.9 million increase in interest expense[10] FY 2024 Net Investment Income Summary | Metric | FY 2024 (Millions USD) | FY 2023 (Millions USD) | Change (Millions USD) | % Change | | :-------------------- | :--------------------- | :--------------------- | :-------------------- | :------- | | Net investment income | $46.1 | $41.0 | $5.1 | 12.3% | | Net investment income per share | $2.11 | $2.20 | $(0.09) | (4.1)% | - Net increase in net assets resulting from operations was $94.5 million ($4.34 per share) for FY 2024, a significant increase from $42.7 million ($2.29 per share) in FY 2023, driven by $46.1 million in net investment income, $42.7 million in net unrealized appreciation, and $6.0 million in net realized gains[12] Subsequent Events and Management Outlook This section outlines significant events occurring after the fiscal year-end and provides management's forward-looking commentary Subsequent Portfolio Activity Post-fiscal year-end, Gladstone Capital executed significant portfolio transactions, including a debt investment payoff, a major investment sale with substantial realized gain, and an additional investment - In October 2024, a debt investment in Perimeter Solutions Group paid off at par for net cash proceeds of $15.5 million, including a $0.5 million prepayment penalty[14] - In October 2024, the investment in Antenna Research Associates, Inc. was sold, resulting in a realized gain of approximately $59.3 million and repayment of a $31.3 million debt investment at par[14] - In November 2024, an additional $28.9 million was invested in Giving Home Health Care, LLC, an existing portfolio company, through secured first lien debt[14] Distributions and Dividends Declared The Board of Directors declared regular monthly distributions for common and preferred stockholders for the upcoming quarter, alongside a supplemental distribution to common stockholders Common Stock Distributions Declared (October-December 2024) | Record Date | Payment Date | Distribution per Common Share | | :------------- | :------------- | :---------------------------- | | October 22, 2024 | October 31, 2024 | $0.165 | | November 20, 2024| November 29, 2024| $0.165 | | December 20, 2024| December 31, 2024| $0.165 | | Total for the Quarter | | $0.495 | Series A Preferred Stock Distributions Declared (October-December 2024) | Record Date | Payment Date | Distribution per A Preferred Stock | | :------------- | :------------- | :--------------------------------- | | October 24, 2024 | November 4, 2024 | $0.130208 | | November 27, 2024| December 4, 2024 | $0.130208 | | December 23, 2024| January 3, 2025 | $0.130208 | | Total for the Quarter | | $0.390624 | Supplemental Common Stock Distribution Declared (November 2024) | Record Date | Payment Date | Distribution per Common Share | | :------------- | :------------- | :---------------------------- | | December 4, 2024 | December 18, 2024| $0.40 | Management Commentary President Bob Marcotte expressed satisfaction with a successful post-quarter-end investment exit contributing to a supplemental distribution, anticipating enhanced net interest margin and earnings for FY 2025 - Pleased to report the successful exit of the largest investment position after quarter-end at a material gain, partially reflected in a recently announced supplemental distribution[15] - Anticipates that the pacing of direct originations, fundings carried over to the current quarter, and reinvestment of equity gain proceeds are expected to enhance net interest margin and earnings available for cash distributions in FY 2025[15] Additional Corporate Information This section provides details on the upcoming conference call, an overview of Gladstone Capital Corporation, and important forward-looking statement disclaimers Conference Call Details Gladstone Capital Corporation will host an earnings conference call on November 14, 2024, with replay options available for stockholders - Earnings release conference call scheduled for Thursday, November 14, 2024, at 8:30 a.m. Eastern Time[16] - A replay of the conference call will be available through November 21, 2024, by dialing (877) 660-6853 and using playback conference number 13748838[16] - Live audio broadcast and archived replay will be available online at www.GladstoneCapital.com[16](index=16&type=chunk) About Gladstone Capital Corporation Gladstone Capital Corporation operates as a publicly-traded business development company, specializing in debt and equity investments for lower middle market businesses in the United States - Gladstone Capital Corporation is a publicly-traded business development company (BDC)[17] - The company invests in debt and equity securities, primarily secured first and second lien term loans, targeting lower middle market businesses in the United States[17] Forward-Looking Statements This section serves as a disclaimer, indicating that forward-looking statements regarding future growth and shareholder returns inherently involve risks and uncertainties, with no commitment to public updates unless legally required - Statements about future growth and shareholder returns are 'forward-looking statements' subject to risks and uncertainties[19] - Actual results and conditions may differ materially from these statements due to various factors, including those described in SEC filings[19] - The Company undertakes no obligation to publicly release revisions to these forward-looking statements, except as required by law[19]