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- **Record 2025 Performance**: $397M originations, 11.9% ROE, 16.75% 5-year ROE.
- **Strong Balance Sheet**: 82.5% leverage, $130M available credit post-refinancing.
- **Pipeline Growth**: $100M+ near-term deals, cautious optimism on lower middle market.
- **Dividend Adjustment**: 9.6% yield to manage rate risk, potential supplementals.
- **Credit Resilience**: Minimal non-earning assets, strong LTV coverage.

**【CEO Summary Section】**
- CEO highlights 2025 as a record year with $397 million in originations and 11.9% ROE, driven by lower middle market investments.
- Emphasizes balance sheet strength post-refinancing, with net debt at 82.5% of NAV and $130 million available credit.
- Proud of 5-year ROE of 16.75%, positioning among top BDC peers.

**【President's Financial Summary】**
- Q4 2025: $126.6 million fundings, $103.1 million net originations, 14% interest income growth to $23.8 million.
- Portfolio yield decline to 12.5% due to 30bps base rate drop, offset by 7.5%+ new originations spreads.
- 2025 results: $63 million fair value increase, 72% first lien debt, 3 non-earning assets at 1.7% of debt.
- Refinanced $207 million debt, increased floating rate borrowings to capitalize on rate declines.

**【CFO Financial Commentary】**
- Q4 2025: Total assets $908 million, net assets $482 million, NAV per share $21.34 (+0.6%).
- Monthly dividend reduced to $0.15 (9.6% yield) to manage rate risk, with potential supplementals from capital gains.
- Gross leverage 84.3% as of Q4, reduced to 82.5% post-refinancing.

**【Q&A Highlights】**
- Pipeline: $100+ million near-term volume, 10+ deals, balanced new/add-on mix.
- WB Xcel improvement: 18 months of EBITDA growth, nearing earning asset status.
- Share buyback consideration at 30%+ discount, current discount insufficient.
- 2026 outlook: Lower turnover (42% of portfolio turned in 2025), cautious optimism on PE sponsor expansion.
- Credit quality: Minimal non-earning assets, strong LTV coverage despite 3 non-accruals.

Gladstone Capital (GLAD) Q4 2025 Earnings Call Transcript

- **Revenue Growth**: Q3 originations of $73M and post-quarter $93M in new deals highlight strong pipeline execution. Portfolio yield rose 20bps to 12.8%.
- **Strategic Discipline**: Maintained 70% first-lien debt, 3x EBITDA leverage, and 7%+ SOFR spreads. Incumbent position with PE-backed businesses supports growth.
- **Financial Resilience**: Net investment income stable at $11.3M; balance sheet remains conservative at 64% debt/NAV. Successful bank line extension supports growth.
- **Risk Management**: 3 non-accruals ($28.8M) under close watch. Portfolio companies have cash flow cushions and growth strategies to weather macro uncertainty.
- **Leverage Outlook**: Post-quarter leverage at 81% but expected to normalize. Evaluating 2026 debt refinancing options to optimize cost.

**【CEO Summary Section】**
- **Q3 2025 Performance**: Funded $73 million in new investments (healthcare, industrial manufacturing) and exited $82 million in repayments, resulting in net originations of -$9 million. Portfolio yield rose 20bps to 12.8%.
- **Pipeline Activity**: Post-quarter, closed $93 million in new deals (4 platform investments, 1 add-on), with $89 million net originations. 88% of new deals were first-lien with 3x EBITDA leverage and 7%+ SOFR margins.
- **Strategic Focus**: Maintained 70% first-lien debt by fair value; 90% of portfolio in debt. Incumbent position in growth-oriented businesses with PE sponsor backing.
- **Leverage Management**: Ended Q3 at 64% debt/NAV; post-quarter, leveraged to 81% with $89 million in new originations funded via cash and borrowings.

**【CFO Financial Commentary】**
- **Income Statement**: Interest income $20.9M (-5.2% YoY), net investment income $11.3M flat vs. prior quarter. Net realized losses $3.6M (EG restructuring, PCB booking decline).
- **Balance Sheet**: Total assets $780M (75% investments), liabilities $306M (64% debt/NAV). Successful bank line extension to $320M with reduced margin.
- **Distribution**: Monthly dividend $0.165 ($1.98 annualized), yielding 7.4% at $26.91 share price.

**【Q&A Highlights】**
- **Market Impact**: Lower middle-market deal flow remains healthy; 88% of new deals >$20M, avoiding competition from larger funds. Average 7%+ SOFR spreads maintained.
- **Portfolio Health**: 3 non-accruals ($28.8M cost basis). Edge Adhesives in wind-down; EG restructured to performing debt. 3x EBITDA leverage and cash flow cushions mitigate macro risks.
- **Leverage Outlook**: Q3 end leverage 64%; post-quarter 81% due to $89M originations. Anticipate normalization as repayments stabilize.
- **Capital Markets**: Evaluating 2026 debt maturity refinancing options; prefer term debt but considering adjustable rate if spreads improve.
- **Pipeline Visibility**: $50-100M originations expected Q4, driven by follow-on investments and new deals. December quarter traditionally active but cautious on macro headwinds.

Gladstone Capital (GLAD) Q3 2025 Earnings Call Transcript

- **Strong Quarter Execution**: $46 million in new investments, stable net income of $11.2 million, and conservative 62.5% leverage ratio.
- **Domestic Manufacturing Advantage**: Tariffs benefiting portfolio companies like RPM and Sea Link through domestic production growth.
- **Pipeline Growth**: $100-150 million in pipeline deals, targeting 50-75 million in Q3 originations.
- **Dividend Stability**: 7.8% yield with monthly distributions of $0.165 per share, supported by healthy cash flows.
- **Risk Mitigation**: Minimal exposure to volatile sectors, with active management of three underperforming investments.

**【CEO Opening Remarks】**
- The company delivered a solid quarter with $46 million in new investments, including private equity-backed deals in semiconductor infrastructure and food products.
- Emphasized adherence to pricing discipline and portfolio management, maintaining a conservative leverage ratio of 62.5% of NAV.
- Highlighted the importance of supporting mid-market private equity sponsors and maintaining consistent dividend distributions.

**【President (Bob Marcotte) Financial Highlights】**
- **Portfolio Performance**: 
  - Total investments declined by $20 million (excluding equity proceeds), with senior debt representing 71% of fair value.
  - Interest income remained stable at $21.3 million, despite a 36bp decline in SOFR rates.
  - Net investment income of $11.2 million ($0.50 per share) driven by cost control and exits.
- **Key Events**: 
  - $81 million in exits and repayments, including a $42 million payoff from SpaceCo post-IPO.
  - Restructuring of EGs investment restored to earning asset status with minimal realized loss.
- **Outlook**: 
  - Healthy pipeline of $100-150 million in potential originations, targeting 50-75 million in Q3.
  - Focus on domestic manufacturing and private credit solutions amid market volatility.

**【CFO (Nicole Schaltenbrand) Financial Details】**
- **Balance Sheet**: 
  - Total assets of $777 million, with $763 million in investments and $25.1 million in credit facility borrowings.
  - NAV per share of $21.41, down $0.10 from prior quarter due to unrealized depreciation.
- **Leverage**: 
  - Debt-to-NAV ratio at 62.5%, with capacity to increase leverage for growth.
- **Distributions**: 
  - Monthly dividend of $0.165 per share (7.8% yield at current price), with Board review in July.

**【Q&A Key Takeaways】**
- **Market Trends**: 
  - Portfolio resilience to widening private credit spreads, with deals averaging >7% over SOFR.
  - Tariffs benefiting domestically focused manufacturers (e.g., RPM, Sea Link) through reduced offshore competition.
- **Risk Management**: 
  - Minimal exposure to government contracts or high-leverage services businesses.
  - Non-earning assets at $29.8 million (4.3% of NAV), with active monitoring of three underperforming investments.
- **Strategic Shifts**: 
  - Increased focus on onshore manufacturing and private credit solutions amid U.S. policy shifts.
  - Targeting $90-100 million leverage ratio, with plans to grow originations in H2 2025.

Gladstone Capital (GLAD)-7 May 25-2025 Q2 Earnings call transcript

- **Record Investment Activity**: $152M in new originations vs. $165M exits, net $45M debt growth.
- **Strong Financials**: 22% ROE, $11.2M net investment income, and 12% NAV growth YoY.
- **Disciplined Underwriting**: 700+ bps spreads, 3.4x EBITDA leverage, and 70% senior debt portfolio.
- **Key Risks**: Auto sector tariff exposure, 7.75% debt refinancing needed, and 1-2Q elevated exit activity.
- **Distribution Stability**: 7% yield at current price, with 70% leverage well below regulatory limits.

**【CEO Opening Remarks】**
- Q1 2024 marked a strong quarter with $152 million in new investments, including 6 new portfolio companies and a strategic refinancing.
- Net realized and unrealized gains totaled $69 million, driving a 12% year-over-year increase in NAV to $21.51 per share.
- Emphasis on disciplined underwriting in lower middle-market businesses (typically under $10M EBITDA) with attractive leverage (3.4x EBITDA) and spreads (700+ bps over SOFR).

**【President (Bob Marcotte) Performance Review】**
- **Investment Activity**: $152M in originations vs. $165M in exits/prepays, net $45M growth in debt investments.
- **Financial Metrics**: 
  - Investment income: $22M (down 7.4% YoY due to 90bps yield decline)
  - Net investment income: $11.2M (+2.5% YoY)
  - ROE: 22% (Q1) and 22% TTM
- **Portfolio Composition**: 73.4% senior debt, 89.3% total debt; $52.7M in non-earning assets (4% of fair value).
- **Key Portfolio Moves**: 
  - $64M equity gain from ARA refinancing
  - Sokol Foods exit ($58M realized gains)
  - EGs restructuring underway with expected 6-12 month resolution.

**【CFO (Nicole Schaltenbrand) Financial Highlights】**
- **Balance Sheet**: 
  - Total assets: $815M (799M investments, 16M cash)
  - Leverage: 70% of NAV (down from 72% QoQ)
  - Debt mix: 70% senior notes, 30% bank line
- **Liquidity**: $254M senior notes maturing 2025-2028; $61.5M undrawn on $100M bank line.
- **Distribution**: $0.165/month (7% yield at $28.09 share price).
- **Share Issuance**: 100K shares ($2.5M) under ATM program.

**【Q&A Key Takeaways】**
1. **Restaurant Sector Strategy**: 
  - Focus on 3-4x EBITDA leverage, sustainable margins (>30%), and quick payback periods (3-4 years).
  - EGs restructuring targeting 6-12 month resolution.
2. **Liquidity Deployment**: 
  - No plans for liquid credit investments due to high bank line costs (7.75% baby bond refinancing planned for Q3).
  - Target leverage: 1:1, but 2025 origination pace may limit progress.
3. **Risk Management**: 
  - Auto sector exposure limited to 2 small investments; monitoring tariffs and supply chain impacts.
  - Manufacturing sector strength in defense/aerospace, with potential reshoring tailwinds.
4. **Portfolio Outlook**: 
  - Elevated exit activity (1-2Qs), with $38M new originations already closed in Q2.
  - Marginal ROE preservation through selective covenant structures and sponsor alignment.


Gladstone Capital (GLAD)-12 Feb 25-2025 Q1 Earnings call transcript

Gladstone Capital (GLAD)-14 Nov 24-2024 Q4 Earnings call transcript

Gladstone Capital (GLAD)-8 Aug 24-2024 Q3 Earnings call transcript

Gladstone Capital (GLAD)-2 May 24-2024 Q2 Earnings call transcript

Gladstone Capital (GLAD)-6 Feb 24-2024 Q1 Earnings call transcript

Gladstone Capital (GLAD)-14 Nov 23-2023 Q4 Earnings call transcript

- **Record Growth**: Q3 originations of $71 million drove 6.6% asset growth, lifting net interest income 11% to $15.9 million.
- **Dividend Boost**: Monthly dividend increased to $0.0825, reflecting 68% YoY rise in net investment income to $0.31 per share.
- **Strategic Shift**: Expanding into asset-backed lending as regional banks retreat, with plans to issue $100-150M perpetual preferred shares.
- **Portfolio Resilience**: 74% senior secured loans, 3.5x EBITDA leverage, and 0.4% non-performing assets highlight risk management.
- **Market Opportunity**: Fee levels rising to 2%+ as tighter capital access benefits Gladstone's origination terms.

**【CEO Opening Remarks】**
- CEO David Gladstone welcomed participants and highlighted the company's strong quarter, emphasizing asset growth of $36 million and a 22% increase in assets over 12 months.
- Noted the portfolio's health with low non-performing assets (0.4% of total investments) and a focus on senior secured loans (74% of portfolio).
- Announced a monthly dividend increase to $0.0825 per share, reflecting confidence in sustained growth.

**【President's Summary】**
- **Originations & Portfolio Growth**: $71 million in originations, ending investment balance rose by $36 million to $715 million.
- **Financial Performance**: Net interest income increased by $1.6 million to $15.9 million; net investment income rose 21% Q/Q to $11.7 million ($0.31 per share).
- **Dividend & NAV**: Dividend increased to $0.0825 per month; NAV per share rose to $9.27, up $0.08 from prior quarter.
- **Strategic Outlook**: Expecting continued growth through follow-on investments, with focus on lower-risk senior secured loans and floating-rate assets.

**【CFO Financial Commentary】**
- **Revenue & Expenses**: Total interest income up 11.4% to $21.8 million; net management fees declined to $4.1 million due to advisory fee credits.
- **Balance Sheet**: Total assets $730 million; leverage at 104% of net assets; $164 million in line of credit advances.
- **Liquidity & Funding**: Renewed credit facility with $350 million accordion; ATM program raised $13.3 million in Q3.
- **Distribution Yield**: Common stock dividend run rate of $0.99 per year, yielding 9.1% at current price.

**【Q&A Highlights】**
- **Fee Credits**: Q3 fee credits of $1 million driven by PIC 360 exit and Inspire refinancing; expect higher fee levels due to tighter market access.
- **Portfolio Trends**: 3.5x EBITDA leverage; 74% senior secured loans; minimal non-accruals (0.4% of assets).
- **Bank Lending Impact**: Regional banks withdrawing from C&amp;I lending, creating opportunities for Gladstone to fill gap with asset-backed financing.
- **Preferred Equity Strategy**: Planning to issue $100-150 million in perpetual preferred shares to diversify funding and reduce reliance on regional banks.
- **Economic Concerns**: Portfolio companies facing revenue growth challenges from price increases offsetting volume declines; focus on businesses with strong cash flow visibility.


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