Gladstone Investment(US:GAIN)2025-02-12 21:06Investment Portfolio - As of December 31, 2024, the investment portfolio consisted of 76.3% in debt investments and 23.7% in equity investments, at cost[164]. - From inception through December 31, 2024, the company has invested approximately $2.0 billion in 62 companies, excluding syndicated loans[169]. - The company exited 32 portfolio companies, generating $332.5 million in net realized gains and $42.0 million in other income, totaling an increase of $374.5 million to net assets[171]. - As of December 31, 2024, unrecognized contractual success fees amounted to $52.8 million, or $1.43 per common share[170]. - The investment strategy focuses on lower middle market private businesses with annual EBITDA of $4 million to $15 million[165]. Financial Performance - Total investment income decreased by $1.7 million, or 7.4%, to $21.4 million for the three months ended December 31, 2024, compared to $23.1 million in the prior year period[182]. - Interest income from debt securities decreased by $1.2 million, or 5.4%, to $20.5 million for the three months ended December 31, 2024[184]. - Total expenses increased by $6.9 million, or 51.5%, to $20.2 million for the three months ended December 31, 2024, primarily due to an increase in incentive fees[190]. - Net investment income fell by $8.6 million, or 88.1%, to $1.2 million for the three months ended December 31, 2024[182]. - The net investment income for the nine months ended December 31, 2024, was $20.9 million, an increase of 26.8% compared to $16.5 million in the prior year[201]. Capital Structure and Financing - The company issued 7.875% 2030 Notes for gross proceeds of $126.5 million during the nine months ended December 31, 2024[172]. - The company has successfully extended the Credit Facility's revolving period to October 2026, with a total commitment amount of $250.0 million[172]. - The company declared monthly cash distributions of $0.08 per common share for January, February, and March 2025, totaling $0.24 for the quarter[178]. - The company anticipates issuing equity securities to obtain additional capital in the future, subject to regulatory constraints when trading below NAV[236]. - The company completed a public offering of the 8.00% 2028 Notes with an aggregate principal amount of $74.8 million, resulting in net proceeds of approximately $72.3 million after deducting underwriting discounts and offering costs of $2.5 million[251][253]. Asset and Liability Management - The asset coverage ratio on senior securities representing indebtedness was 185.9% as of December 31, 2024[176]. - As of December 31, 2024, the company had a net worth of $943.9 million and asset coverage of 185.9% on senior securities representing indebtedness[242]. - The company's total contractual obligations as of December 31, 2024, amounted to $691.8 million, including $463.7 million in notes payable and $136.6 million in interest payments[259]. - The company has line of credit commitments to portfolio companies totaling an aggregate principal of $4.8 million, which are not fully drawn[258]. Investment Income and Expenses - The capital gains-based incentive fee recorded was $7.5 million for the three months ended December 31, 2024, compared to a reversal of $0.6 million in the prior year period[191]. - Total expenses, net of credits from the Adviser, decreased by $2.0 million, or 4.1%, during the nine months ended December 31, 2024, mainly due to a reduction in incentive fees[209]. - The total investment income for the nine months ended December 31, 2024, increased by $2.5 million, or 3.9%, compared to the prior year, driven by higher interest income and dividend and success fee income[203]. Market Performance - The closing market price of the common stock on December 31, 2024, was $13.25 per share, representing a 0.4% discount to the net asset value (NAV) of $13.30 per share[173]. - As of December 31, 2024, the fair value of the investment portfolio exceeded the cost basis by $50.5 million, compared to $13.2 million as of September 30, 2024[199]. - The weighted-average yield on interest-bearing investments was 14.0% for the three months ended December 31, 2024, down from 14.4% in the prior year[186]. Risk Management - The primary risk exposure for the company is interest rate risk, which affects net investment income due to borrowing costs and investment rates[268]. - The average risk rating for loans in the company's portfolio improved from 6.6 in March 2024 to 6.9 in December 2024, with a weighted-average rating increasing from 6.9 to 7.4[264]. - The company targets approximately 90% of loans in its portfolio to be at variable rates, with all variable-rate loans linked to the current 30-day SOFR rate as of December 31, 2024[269].