Financial Data and Key Metrics Changes - The company generated adjusted net investment income (NII) of $0.97 per share, covering the annual dividend of $0.96 per share [7][13] - The total fair value of the portfolio increased to $979 million from approximately $921 million at the prior year end, although it was slightly lower than the $1.1 billion reported at the end of the last quarter [8] - Total investment income for the fiscal year was $93.7 million, up from $87.3 million in the prior year [13] Business Line Data and Key Metrics Changes - The company invested a total of $221 million during the year, an increase from $184 million in the prior year, which included investments in four new portfolio companies and add-on investments [9] - The company maintained a monthly distribution to shareholders of $0.08 per share, aggregating to $1.66 per share for the year, with a supplemental distribution of $0.54 per share declared for April [9][19] Market Data and Key Metrics Changes - The company noted good liquidity in the M&A market, although it is a competitive environment with new variables regarding tariffs impacting evaluations of new opportunities [10][11] - The company is cautiously optimistic about new acquisitions, expecting to close two new acquisitions shortly [11] Company Strategy and Development Direction - The company aims to reward shareholders with meaningful supplemental distributions from realized capital gains while maintaining and growing monthly distributions from operating income [9] - The management is focused on evaluating supply chain alternatives and production strategies to navigate the current economic environment [11] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the economic landscape, noting that while there are challenges due to tariffs, the current portfolio is in good shape with a strong balance sheet [12][18] - The recent pause on tariffs was seen as a relief, although the company is awaiting a permanent solution [11] Other Important Information - The company ended the fiscal year with $55.3 million in spillover, sufficient to cover current monthly distributions and the supplemental distribution [19][54] - The net asset value (NAV) increased to $13.55 per share compared to $13.30 per share at the end of the prior quarter [17] Q&A Session Summary Question: How much of the portfolio has exposure to tariff risk? - Most portfolio companies have some exposure to tariff risk, particularly those manufacturing in China, but management is not overly concerned as they have been proactive in addressing these issues [24][25] Question: How much exposure does the portfolio have to lower-income customers? - The portfolio does not have significant exposure to lower-income customers, focusing instead on consumer products that are not categorized as essential goods [27][28] Question: Update on non-accrual companies? - There are four companies on non-accrual status, with three being profitable, including Hobbs, which management is optimistic about bringing back on accrual [30][31] Question: What gives cautious optimism for buyout activity? - The company is close to closing a couple of acquisitions and has a strong pipeline of companies under review, although economic uncertainty remains a concern [41][42] Question: Rationale for the dividend recap of Educators Resource? - The dividend recap was seen as a reinvestment decision, allowing management to take some liquidity while the company continues to perform well [48][49]
Gladstone Investment(GAIN) - 2025 Q4 - Earnings Call Transcript