Gladstone Capital (US:GLAD)2024-02-04 16:00Investment Portfolio - As of December 31, 2023, the investment portfolio consisted of approximately 90.6% debt investments and 9.4% equity investments, at cost[158]. - During the three months ended December 31, 2023, the company invested $11.0 million in a new portfolio company and extended $47.0 million to existing portfolio companies, resulting in a total portfolio increase of $37.4 million at cost since September 30, 2023[165]. - The company has made 646 different loans or investments totaling approximately $2.7 billion since its initial public offering in August 2001[165]. - The company focuses on lower middle market companies with annual earnings before interest, taxes, depreciation, and amortization of $3 million to $25 million[159]. - As of December 31, 2023, the company had loans and equity investments in 51 companies with an aggregate cost basis of approximately $759.6 million, up from $722.3 million as of September 30, 2023[189]. Financial Performance - Investment income increased by 20.4% to $23.2 million for the three months ended December 31, 2023, compared to $19.3 million in the prior year[175]. - Interest income rose by 25.2% to $23.0 million, driven by an 11.5% increase in the weighted average principal balance of interest-bearing investments to $657.6 million[176]. - Net investment income for the three months ended December 31, 2023, was $11.9 million, a 36.8% increase from $8.7 million in the prior year[175]. - The net realized gain on investments was $0.3 million, a significant decrease from $9.3 million in the same period last year[183][184]. - Net unrealized appreciation of investments amounted to $7.8 million, reflecting improved financial performance of several portfolio companies[185]. Expenses and Distributions - Total expenses, net of credits, increased by 6.8% to $11.3 million, primarily due to a $0.8 million rise in the incentive fee earned by the Adviser[179]. - The net base management fee decreased by 30.5% to $1.7 million, attributed to increased credits for new deal origination fees[181]. - The company declared a total distribution of $0.2475 per common share for the quarter ending March 2024[172]. - Monthly cash distributions for the three months ended December 31, 2023, were $0.0825 per common share, totaling $10.8 million, compared to $0.07 per share and $7.4 million for the same period in 2022[193]. - The company paid distributions to common stockholders totaling approximately $469.8 million or $23.02 per share from inception through December 31, 2023[193]. Debt and Financing - The company has a total commitment amount of $233.7 million under its Credit Facility, which has been extended to October 2025[167]. - The effective interest rate on the Credit Facility increased to 12.7% from 6.9% year-over-year, influenced by rising interest rates[180]. - Net cash provided by financing activities for the three months ended December 31, 2023, was $26.4 million, primarily from $37.2 million in net borrowings on the Credit Facility[191]. - The Credit Facility had a total commitment amount of $233.7 million as of December 31, 2023, with an accordion feature allowing an increase to $350.0 million[201]. - Interest expense on debt obligations is estimated at $77.682 million over the contractual obligation periods[216]. Market and Risk Factors - The company is exposed to interest rate risk, which could materially affect its net investment income due to borrowing costs[227]. - The average risk rating for proprietary loans in the portfolio was 7.2 as of December 31, 2023, compared to 7.1 as of September 30, 2023[221]. - As of December 31, 2023, the portfolio of debt investments consisted of 88.3% variable rates and 11.7% fixed rates[228]. - There have been no material changes in the quantitative and qualitative market risk disclosures for the three months ended December 31, 2023[228]. Asset Coverage and Valuation - As of December 31, 2023, the asset coverage on senior securities representing indebtedness was 219.3%[171]. - The total portfolio investment at fair value increased to $749.985 million as of December 31, 2023, up from $621.739 million at the end of December 31, 2022[190]. - As of December 31, 2023, the company had a net worth of $670.1 million and an asset coverage ratio of 219.3% for senior securities representing indebtedness[207]. - The company anticipates issuing equity securities to obtain additional capital in the future, with the ability to issue up to an additional $151.1 million in securities under its shelf registration statement as of December 31, 2023[197]. Other Financial Metrics - The company recorded net unrealized depreciation of investments totaling $12.6 million for the three months ended December 31, 2022, mainly due to the exit of the investment in Targus Cayman HoldCo, Ltd.[186]. - The loan to Edge Adhesives Holdings, Inc. remained on non-accrual status with a cost basis of $6.1 million, representing 0.9% of the total debt investments[177]. - The average total assets subject to the base management fee increased to $741.7 million from $646.6 million year-over-year[182]. - The company completed an offering of $57.0 million aggregate principal amount of 7.75% Notes due 2028, with net proceeds of approximately $55.1 million[208]. - Total contractual obligations as of December 31, 2023, amount to $419.682 million, including $22.406 million due within one year[216].