Gladstone Capital (US:GLAD)2021-02-02 16:00Investment Activities - The company invested $29.0 million in two new portfolio companies and extended $0.1 million in investments to existing portfolio companies during the three months ended December 31, 2020 [173]. - The company made significant investments in December 2020, including $19.0 million in Effective School Solutions LLC and $10.0 million in Encore Dredging Holdings, LLC [174]. - The company exited three portfolio companies through early payoffs during the three months ended December 31, 2020 [173]. - The company has made 557 different loans to, or investments in, 248 companies for a total of approximately $2.1 billion since its initial public offering in August 2001 [173]. - New investments during the three months ended December 31, 2020, were $29.0 million, down from $38.0 million in the same period of 2019 [209]. Financial Performance - Total investment income for the three months ended December 31, 2020, was $12.882 million, an increase of 5.9% compared to $12.159 million in the same period of 2019 [188]. - Interest income rose by 5.5% to $12.082 million for the three months ended December 31, 2020, driven by a $42 million increase in the weighted average principal balance of the interest-bearing portfolio, which reached $443.4 million [189]. - Net investment income for the three months ended December 31, 2020, was $6.280 million, a slight decrease of 2.1% from $6.417 million in the same period of 2019 [188]. - The company recorded a net realized loss on investments of $2.144 million for the three months ended December 31, 2020, an improvement from a loss of $4.434 million in the prior year [198]. - Net unrealized appreciation of investments was $8.495 million for the three months ended December 31, 2020, significantly up from $139, indicating a strong recovery in certain portfolio companies [200]. Expenses and Cash Flow - Total expenses, net of credits, increased by 15.0% to $6.602 million for the three months ended December 31, 2020, compared to $5.742 million in the same period of 2019 [188]. - For the three months ended December 31, 2020, net cash provided by operating activities was $12.2 million, compared to a net cash used of $24.3 million for the same period in 2019 [207]. - Net cash used in financing activities for the three months ended December 31, 2020, was $13.1 million, primarily due to $111.7 million in net repayments on the Credit Facility [210]. Debt and Equity - The company completed a debt offering of $100.0 million aggregate principal amount of its 5.125% Notes due 2026 in December 2020 [176]. - The company completed a debt offering of $100.0 million in December 2020, with net proceeds of approximately $97.7 million, bearing interest at a rate of 5.125% per year [230]. - The commitment amount of the Credit Facility was increased from $180 million to $205 million on December 9, 2020 [220]. - The company has the ability to issue up to an additional $124.8 million in securities under its shelf registration statement as of December 31, 2020 [216]. - The company redeemed its 2023 Notes with an aggregate principal amount of $57.5 million on January 7, 2021, for a net redemption amount of $58.1 million [232]. Market and Risk Exposure - The primary risk exposure for the company is interest rate risk, which affects net investment income based on the difference between borrowing and investment rates [248]. - As of December 31, 2020, the company's portfolio of debt investments consisted of 79.6% variable-rate and 20.4% fixed-rate investments [249]. - The company’s variable-rate debt investments are generally associated with the current LIBOR or prime rate [249]. - The average risk rating for proprietary loans in the company's portfolio was 6.4 as of December 31, 2020, indicating a moderate level of credit risk [242]. - There have been no material changes in the quantitative and qualitative market risk disclosures for the three months ended December 31, 2020, compared to the Annual Report [249]. Asset and Shareholder Information - As of December 31, 2020, the investment portfolio consisted of approximately 92.0% debt investments and 8.0% equity investments at cost [166]. - The closing market price of the company's common stock on December 31, 2020, was $8.86 per share, representing a 16.4% premium to the NAV per share of $7.61 [178]. - As of December 31, 2020, the company had a net worth of $438.5 million and asset coverage of 213.2% on its senior securities representing indebtedness [229]. - The company declared total distributions of $0.195 per common share for the quarter ending March 31, 2021 [184]. - The company paid monthly cash distributions of $0.065 per common share for the three months ended December 31, 2020, totaling $6.3 million [212].