Gladstone Investment(GAIN) - 2026 Q1 - Quarterly Results

Introduction Gladstone Investment Corporation announced its Q1 FY2025 financial results, with the full report available on the SEC website Company Announcement Gladstone Investment Corporation announced its financial results for the first fiscal quarter ended June 30, 2025, with the full report available on the SEC's website and the company's investor section - Gladstone Investment Corporation (Nasdaq:GAIN) announced earnings for its first fiscal quarter ended June 30, 2025[1] - The full Quarterly Report on Form 10-Q was filed with the U.S. Securities and Exchange Commission (SEC) on August 12, 2025[1] Financial Summary and Key Metrics The company reported decreased total investment income but increased net investment income, with a decline in NAV per share and growth in total investments Summary Financial Data The company reported a decrease in total investment income but an increase in net investment income for the quarter ended June 30, 2025, compared to the previous quarter, primarily due to a significant reduction in total expenses. Net asset value per common share saw a decline Summary Financial Performance (QoQ) | Metric | June 30, 2025 ($) | March 31, 2025 ($) | $ Change ($) | % Change (%) | | :------------------------------------------ | :------------ | :------------- | :------- | :------- | | Total investment income | $23,544 | $27,548 | $(4,004) | (14.5)% | | Total expenses, net | $14,456 | $20,319 | $(5,863) | (28.9)% | | Net investment income | $9,088 | $7,229 | $1,859 | 25.7 % | | Net realized gain | — | $20,879 | $(20,879) | (100.0)% | | Net unrealized depreciation | $(1,316) | $(10,235) | $8,919 | (87.1)% | | Net increase in net assets from operations | $7,772 | $17,873 | $(10,101) | (56.5)% | | Net investment income per weighted-average common share | $0.25 | $0.20 | $0.05 | 25.0 % | | Adjusted net investment income per weighted-average common share | $0.24 | $0.26 | $(0.02) | (7.7)% | | Net asset value per common share | $12.99 | $13.55 | $(0.56) | (4.1)% | | Total investments, at fair value | $1,036,745 | $979,320 | $57,425 | 5.9 % | | Number of portfolio companies | 27 | 25 | 2 | 8.0 % | Quarterly Highlights and Performance Analysis Key quarterly activities included ATM program sales, distributions, and new portfolio investments, alongside detailed income and expense analysis Distributions and ATM Program Activity During the quarter, the company sold common stock under its ATM program, raising net proceeds above NAV, and paid regular and supplemental distributions to common stockholders - Sold 515,295 shares of common stock under the ATM program at a weighted-average gross price of $14.23 per share, raising approximately $7.2 million in net proceeds. These sales were net proceeds above NAV[3] - Paid an $0.08 per common share distribution to common stockholders in each of April, May, and June 2025[7] - Paid a $0.54 per common share supplemental distribution to common stockholders in June 2025[7] First Quarter Results Overview Net investment income for the quarter ended June 30, 2025, increased to $9.1 million, or $0.25 per weighted-average common share, compared to $7.2 million, or $0.20 per share, in the prior quarter, primarily driven by a decrease in total expenses Net Investment Income (QoQ) | Metric | June 30, 2025 ($) | March 31, 2025 ($) | $ Change ($) | % Change (%) | | :------------------------------------------ | :------------ | :------------- | :------- | :------- | | Net investment income | $9.1 million | $7.2 million | $1.9 million | 26.4% | | Net investment income per weighted-average common share | $0.25 | $0.20 | $0.05 | 25.0% | - The increase in net investment income was a result of a decrease in total expenses, net of credits, primarily due to lower accruals for capital gains-based and income-based incentive fees, decreased interest expense, and increased credits from the Adviser, partially offset by a decrease in total investment income[3] Total Investment Income Analysis Total investment income decreased quarter-over-quarter due to lower success fee and dividend income, partially offset by an increase in interest income from the collection of past due interest from a previously non-accrual portfolio company Total Investment Income (QoQ) | Metric | June 30, 2025 ($) | March 31, 2025 ($) | $ Change ($) | % Change (%) | | :---------------------- | :------------ | :------------- | :------- | :------- | | Total investment income | $23.5 million | $27.5 million | $(4.0) million | (14.5)% | - The decrease was due to a $3.5 million decrease in success fee income and a $0.7 million decrease in dividend income[4] - Partially offset by a $0.1 million increase in interest income, primarily from the collection of $1.5 million of past due interest from a portfolio company previously on non-accrual status[4] Total Expenses Analysis Total expenses, net of credits, significantly decreased quarter-over-quarter, primarily driven by lower accruals for capital gains-based and income-based incentive fees, reduced interest expense, and increased credits from the Adviser Total Expenses, Net of Credits (QoQ) | Metric | June 30, 2025 ($) | March 31, 2025 ($) | $ Change ($) | % Change (%) | | :---------------------- | :------------ | :------------- | :------- | :------- | | Total expenses, net | $14.5 million | $20.3 million | $(5.8) million | (28.9)% | - The decrease was primarily due to a $2.3 million decrease in accruals for capital gains-based incentive fees, a $2.3 million decrease in income-based incentive fees, and a $0.5 million decrease in interest expense[5] - The decrease was also due to a $0.4 million increase in credits from the Adviser[5] Net Asset Value per Common Share Net asset value per common share declined to $12.99 as of June 30, 2025, from $13.55 as of March 31, 2025, mainly due to distributions paid and net unrealized depreciation, partially offset by net investment income and the accretive effect of equity offerings Net Asset Value per Common Share (QoQ) | Metric | June 30, 2025 ($) | March 31, 2025 ($) | $ Change ($) | % Change (%) | | :-------------------------- | :------------ | :------------- | :------- | :------- | | Net asset value per common share | $12.99 | $13.55 | $(0.56) | (4.1)% | - The decrease was primarily due to $28.8 million ($0.78 per common share) of distributions paid to common shareholders and $1.3 million ($0.04 per common share) of net unrealized depreciation on investments[6] - These decreases were partially offset by $9.1 million ($0.25 per common share) of net investment income and $0.01 per common share of net accretive effect of equity offering[6] Portfolio Activity During the quarter, the company made two new investments totaling $62.3 million in Smart Chemical Solutions and Sun State Nursery and Landscaping, and restructured its investment in PSI Molded Plastics - Invested $49.5 million in Smart Chemical Solutions, LLC (Midland, Texas), a provider of production chemicals for onshore oil and gas operators, in the form of $35.7 million secured first lien debt and $13.8 million preferred equity[7] - Invested $12.8 million in Sun State Nursery and Landscaping, LLC (Jacksonville, Florida), a commercial landscaping provider, in the form of $9.8 million secured first lien debt and $3.1 million preferred equity[7] - Restructured investment in PSI Molded Plastics, Inc., converting debt with a cost basis of $10.6 million into preferred equity[7] Subsequent Events Post-quarter events include a significant new investment, declared monthly distributions, and continued ATM program activity Significant Investment Activity After the quarter ended, the company made a significant new investment in Global GRAB Technologies, Inc., a provider of perimeter security systems - In July 2025, invested $67.6 million in Global GRAB Technologies, Inc., a provider of turnkey perimeter security and hostile vehicle mitigation systems[8] - The investment in Global GRAB Technologies consisted of $46.5 million of secured first lien debt and $21.1 million of preferred equity[8] Distributions and Dividends Declared The Board of Directors declared monthly distributions of $0.08 per common share for July, August, and September 2025, totaling $0.24 for the quarter Monthly Distributions Declared (July-September 2025) | Record Date | Payment Date | Distribution per Common Share ($) | | :---------- | :----------- | :---------------------------- | | July 21, 2025 | July 31, 2025 | $0.08 | | August 20, 2025 | August 29, 2025 | $0.08 | | September 22, 2025 | September 30, 2025 | $0.08 | | Total for the Quarter: | | $0.24 | ATM Program Activity Post-Quarter Subsequent to June 30, 2025, the company continued its ATM program activity, selling additional shares and raising net proceeds above the then-current estimated NAV per share - Subsequent to June 30, 2025, sold 866,554 shares of common stock under the ATM program[10] - These sales were at a weighted-average gross price of $14.14 per share, raising approximately $12.1 million in net proceeds, net proceeds above NAV[10] Non-GAAP Financial Measure: Adjusted Net Investment Income This section defines and reconciles adjusted net investment income, a non-GAAP measure excluding capital gains-based incentive fees for operational clarity Definition and Rationale Adjusted net investment income is a non-GAAP measure that excludes capital gains-based incentive fees from net investment income, providing a clearer view of ongoing operational results by separating them from investment activity related to capital gains - Adjusted net investment income represents net investment income, excluding capital gains-based incentive fees[10] - The Company uses this non-GAAP measure internally and believes it is useful to investors as an additional tool to evaluate ongoing results and trends, as net investment income does not include realized or unrealized investment activity associated with the capital gains-based incentive fee[10] Reconciliation to GAAP Net Investment Income The reconciliation shows that for the quarter ended June 30, 2025, a reversal of capital gains-based incentive fees led to a higher GAAP net investment income compared to Adjusted net investment income, contrasting with the prior quarter where an accrual reduced GAAP NII Reconciliation of Net Investment Income to Adjusted Net Investment Income (QoQ) | Metric | June 30, 2025 (Amount $) | June 30, 2025 (Per Share $) | March 31, 2025 (Amount $) | March 31, 2025 (Per Share $) | | :------------------------------------------ | :--------------------- | :------------------------ | :---------------------- | :------------------------- | | Net investment income | $9,088 | $0.25 | $7,229 | $0.20 | | Capital gains-based incentive fee | $(209) | $(0.01) | $2,129 | $0.06 | | Adjusted net investment income | $8,879 | $0.24 | $9,358 | $0.26 | | Weighted-average shares of common stock outstanding - basic and diluted | 36,908,943 | | 36,837,381 | | Non-GAAP Measure Disclaimer The company clarifies that Adjusted net investment income is a non-GAAP financial measure, may not be comparable to similar measures from other companies, and should be considered as a supplement to, not a substitute for, GAAP financial measures - Adjusted net investment income may not be comparable to similar measures presented by other companies, as it is a non-GAAP financial measure not based on a comprehensive set of accounting rules or principles[12] - Adjusted net investment income should be considered in addition to, not as a substitute for, or superior to, GAAP financial measures[12] Company Information and Disclosures Details for the earnings conference call, company profile, important financial disclosures, investor relations contacts, and forward-looking statements are provided Conference Call Details The company will host an earnings conference call on August 13, 2025, with replay options and an online broadcast available for investors - The Company will hold its earnings release conference call on Wednesday, August 13, 2025, at 8:30 a.m. Eastern Time[13] - A replay of the conference call will be available through August 20, 2025, by dialing (877) 660-6853 and using playback conference number 13754185[13] - The live audio broadcast and archived replay will also be available online at www.gladstoneinvestment.com[13](index=13&type=chunk) About Gladstone Investment Corporation Gladstone Investment Corporation is a publicly traded business development company that invests in lower middle market U.S. businesses through secured debt and equity for acquisitions, changes in control, and recapitalizations - Gladstone Investment Corporation is a publicly traded business development company[14] - It seeks to make secured debt and equity investments in lower middle market businesses in the United States[14] - Investments are made in connection with acquisitions, changes in control, and recapitalizations[14] Important Disclosures The company advises that the financial information provided in the press release is not comprehensive and encourages readers to review the full Form 10-Q for complete details and notes to the consolidated financial statements - The financial information above is not comprehensive and is without notes[15] - Readers should obtain and carefully review the Company's Form 10-Q for the quarter ended June 30, 2025, including the notes to the consolidated financial statements[15] Investor Relations Contact information for investor relations inquiries is provided - Investor Relations Inquiries can be directed to ir.gladstoneinvestment.com or by calling (703) 287-5893[16] Forward-looking Statements This section includes a standard disclaimer that statements regarding potential future distributions, earnings, and operations are forward-looking and inherently involve risks and uncertainties that could cause actual results to differ materially from expectations - Statements in the press release regarding potential future distributions, earnings, and operations are 'forward-looking statements'[17] - These statements inherently involve certain risks and uncertainties in predicting future results and conditions[17] - A number of factors could cause actual results and conditions to differ materially from these forward-looking statements, including those described in the Company's SEC filings[17]