Gladstone Capital (GLAD) - 2025 Q3 - Quarterly Results

Summary of Financial Results Gladstone Capital reported stable Net Investment Income (NII) of $0.50 per share for the third fiscal quarter of 2025, unchanged from the prior quarter, while Net Asset Value (NAV) per common share decreased slightly by 0.7% to $21.25, and the total fair value of investments saw a minor decline of 1.5% to $751.3 million Q3 2025 Financial Summary (vs. Q2 2025) | | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | Change (in thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | For the Quarter Ended: | | | | | | Total investment income | $21,657 | $21,569 | $88 | 0.4% | | Net investment income | $11,294 | $11,245 | $49 | 0.4% | | Net investment income per common share ($) | $0.50 | $0.50 | $0.00 | 0.0% | | Net increase (decrease) in net assets | $7,448 | $8,797 | $(1,349) | (15.3)% | | As of: | | | | | | Total investments, at fair value | $751,260 | $762,636 | $(11,376) | (1.5)% | | Net asset value per common share ($) | $21.25 | $21.41 | $(0.16) | (0.7)% | Third Fiscal Quarter 2025 Highlights During the quarter, the company was active in its portfolio, investing a total of $73.0 million across new and existing companies, maintaining a conservative portfolio mix with over 70% in secured first lien assets, and successfully extending its credit facility to October 2029, increasing its total commitment to $320.0 million - Invested $58.6 million in two new portfolio companies and $14.4 million in existing ones[5] - The portfolio composition remains conservative, with secured first lien assets constituting over 70% of debt investments at cost[5] - The credit facility was expanded to a total commitment of $320.0 million, with the revolving period extended to October 2027 and final maturity to October 2029[5] Detailed Financial Performance Analysis For the quarter ended June 30, 2025, total investment income saw a marginal increase of 0.4%, driven by higher prepayment fees and dividend income, which offset a decrease in interest income from a smaller average portfolio balance, while expenses remained flat as lower interest expense was offset by higher management and incentive fees, resulting in a stable Net Investment Income of $11.3 million, or $0.50 per share, and a net increase in net assets from operations of $7.4 million, a decrease from the prior quarter, primarily due to a $3.6 million net realized loss - Total investment income increased slightly by $88 thousand, primarily due to a $0.6 million increase in other income (prepayment fees and dividends), which was partially offset by a $0.5 million decrease in interest income[6] - Total expenses were stable quarter-over-quarter, as a $0.6 million decrease in interest expense was offset by a $0.5 million increase in net base management and incentive fees[7] Quarterly Income and Net Asset Changes | Metric | Amount (in millions) | Per Share ($) | | :--- | :--- | :--- | | Net Investment Income | $11.3 | $0.50 | | Net Increase in Net Assets | $7.4 | $0.33 | Subsequent Events Following the quarter's end, Gladstone Capital was highly active, investing a total of $94.3 million in five new and existing portfolio companies during July and August 2025, and the company's Board of Directors also declared monthly distributions for its common and preferred stock for the upcoming quarter Portfolio Activity In July and August 2025, the company deployed significant capital, investing in five companies across various sectors through secured first and second lien debt, as well as equity, with this activity including one debt payoff at par from 8th Avenue Food and Provisions, Inc - Subsequent to quarter-end, the company made several significant investments: - $25.0 million in MASSiv Brands, LLC (secured first lien debt) - $15.0 million in Alsay, Inc. (secured second lien debt and preferred equity) - $23.7 million in Snif-Snax, LLC (secured first lien debt and preferred equity) - $13.0 million in a precision manufacturing business (secured first lien debt and common equity) - An additional $16.6 million in existing portfolio company OCI, LLC[12] Distributions and Dividends Declared In July 2025, the Board of Directors declared monthly cash distributions of $0.165 per common share for July, August, and September 2025, totaling $0.495 for the quarter, with dividends also declared for the Series A Preferred Stock Common Stock Distributions Declared | Record Date | Payment Date | Distribution per Share ($) | | :--- | :--- | :--- | | July 21, 2025 | July 31, 2025 | $0.165 | | August 20, 2025 | August 29, 2025 | $0.165 | | September 22, 2025 | September 30, 2025 | $0.165 | | Total for the Quarter | | $0.495 | Management Commentary President Bob Marcotte stated that the company has successfully managed recent portfolio liquidity events, ending the quarter with a strong balance sheet and funding capacity, expressing confidence in the company's lower middle market strategy and its ability to grow the investment portfolio to support future shareholder distributions, which is evidenced by the robust funding activity that occurred after the quarter's end - Management believes the company has absorbed the recent surge in portfolio liquidity events and ended the quarter with a strong balance sheet and funding capacity[13] - The company is confident in its lower middle market deal focus and is on track to grow the investment portfolio to support shareholder distributions, as demonstrated by significant subsequent funding events[13] Conference Call Information The company will host a conference call for stockholders on Tuesday, August 5, 2025, at 8:30 a.m. Eastern Time to discuss the quarterly results, with details for participation via phone and online webcast, as well as for a replay, provided - The earnings conference call is scheduled for Tuesday, August 5, 2025, at 8:30 a.m. Eastern Time[13] - To participate, call (866) 424-3437, and a replay will be available by dialing (877) 660-6853 with conference number 13754182[13] About Gladstone Capital Corporation Gladstone Capital Corporation is a publicly-traded business development company (BDC) whose primary investment strategy is to provide secured first and second lien term loans and equity securities to lower middle market businesses in the United States - Gladstone Capital is a business development company (BDC) that primarily invests in secured first and second lien term loans to lower middle market U.S. businesses[14] Forward-looking Statements This section contains a standard legal disclaimer, cautioning that statements in the press release regarding future growth and shareholder returns are forward-looking and subject to inherent risks and uncertainties, and the company does not commit to updating these statements unless required by law - The press release includes forward-looking statements concerning future growth and returns, which are subject to risks and uncertainties that could cause actual results to differ materially[17]