Gladstone Investment(US:GAIN)2021-11-03 14:10Financial Data and Key Metrics Changes - The company reported adjusted net investment income (NII) of $0.23 per share for Q2 FY2022, showing an improvement from $0.20, $0.24, and $0.24 in the previous three quarters [12] - Net asset value (NAV) per share increased from $12.66 at June 30, 2021, to $13.27 at September 30, 2021 [14] - Total assets rose to $746 million from $713 million over the same period [14] Business Line Data and Key Metrics Changes - The company made one new buyout during the quarter and continued to invest in existing portfolio companies for add-on acquisitions, which is a focus area for value building [15] - Investment income increased quarter-over-quarter, primarily due to other income, despite a decline in interest income due to one loan going into non-accrual [21][22] Market Data and Key Metrics Changes - The company noted that the flow of buyout opportunities remains strong, although purchase price expectations are elevated, necessitating a patient and selective approach [18] Company Strategy and Development Direction - The company aims to continue generating income from monthly distributions and capital gains, which supports supplemental distributions [16] - A strong and liquid balance sheet allows the company to support portfolio companies with add-on acquisitions and interim financing [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges such as supply chain issues and inflation but expressed optimism about the portfolio's performance and recovery from COVID impacts [12][19] - The company expects continued good earnings and distributions for the fiscal year [19] Other Important Information - The company increased its monthly distribution to shareholders by 7%, amounting to $0.075 per share, with an annual run rate of $0.90 per share [14] - A supplemental distribution of $0.09 per share was declared to be paid in December 2021 [14] Q&A Session Summary Question: How are portfolio companies dealing with supply shortages and inflation? - Management indicated that portfolio companies are managing supply chain issues reasonably well, with some able to pass on price increases to customers, although margins may tighten slightly [33][36] Question: What is the situation with J.R. Hobbs and their backlog? - J.R. Hobbs is experiencing a large backlog due to delays in construction projects, but they have not lost business and are expected to work through this backlog positively [39] Question: Was the unrealized appreciation due to valuation multiples or company performance? - Management noted that the unrealized appreciation was a combination of operational improvements and EBITDA increases, with performance upticking outweighing any increase in multiples [42]