Gladstone Capital Corporation · NASDAQ:GLAD
Gladstone Capital — IPO Roadshow (December 2020)
24 slides from Gladstone Capital's IPO roadshow presentation, Dec 3, 2020
Slide 1: Financing for Lower Middle-Market Companies
Investor Presentation December 3, 2020 Financing for Lower Middle-Market Companies Filed Pursuant to Rule 433 Issuer Free Writing Prospectus dated December 3, 2020 Relating to Registration Statement No. 333-228720
Slide 2: Legal Disclaimer
Legal Disclaimer Forward-Looking Statements: This presentation may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may include commen
Slide 3: Legal Disclaimer, cont.
Legal Disclaimer, cont. We have filed a registration statement (including a prospectus) with the SEC for any offering to which this communication relates and may file one or more supplements to the prospectus in the future relating to a specific offering. Before you invest, you should read the prosp
Slide 4: Gladstone Capital Overview
Gladstone Capital Overview Background: Founded in 2001, Gladstone Capital was one of the first business development companies (BDC) focused on making loans to lower middle market (“LMM”) U.S. businesses and its investment team continues to be dedicated to the BDC’s activities and performance and ali
Slide 5: Attractive Lower Middle Market Dynamics
Attractive Lower Middle Market Dynamics Why we target lower middle market companies Greater industry diversity and more consistent flow of growth-oriented investment opportunities across the vast array of U.S. based lower middle market businesses Lower middle market companies typically sell for lowe
Slide 6: Disciplined Investment Origination
Disciplined Investment Origination Focused on direct origination of lower middle market secured loans where GLAD controls documentation, lender protections and ongoing compliance/monitoring including board observation rights on all credits Debt investments based on demonstrated cashflow profile and
Slide 7: Portfolio Metrics
Portfolio Metrics * For the purposes of this presentation, certain non-core investments have been excluded including investments: (i) Syndicated Loans; (ii) debt/equity co-investments with GAIN; (iii) investments under $4 million; (iv) equity only investments; (v) one negative EBITDA business; (vi)
Slide 8: Portfolio Metrics
Portfolio Metrics Delineating the core loan portfolio into the 1st/2nd lien components as outlined below supports a number of earlier representations: The 1st lien investments are on average to smaller businesses while the 2nd lien investments are to larger and more established businesses The deline
Slide 9: Risk Management
Risk Management Ongoing Monitoring: Gladstone Capital requires board level participation in all portfolio companies to directly engage management, shareholders and directors regarding timely operating and financial performance of the business Quarterly board level participation provides added transp
Slide 10: Portfolio Diversity and Deal Sources
Portfolio Diversity and Deal Sources Portfolio Diversification Across 18 Industries - At 9/30/2020 Fair Value Deal Source Composition - At 9/30/2020 Fair Value
Slide 11: Recent Investment Activity
Recent Investment Activity Diversity of LMM sector and market need for tailored financial solutions undeterred by 2020 challenges, 3 recent examples of GLAD investment activity… Leisure Products $26MM Uni-Tranche August 2020 Aerospace & Defense $20MM Unitranche Loan Sponsor Platform Acquisition Spac
Slide 12: Historical Credit Performance
Historical Credit Performance Gladstone Capital has a history of conservative investment valuations which contribute to the low levels of non-accrual investments which have declined to 1.5% of our total portfolio last quarter in spite of COVID-19 market disruptions Over the past 5 years, the bulk of
Slide 13: Leverage Profile
Leverage Profile Modest leverage and diversified capital sources While GLAD has approval/flexibility to increase leverage to the BDC statutory leverage cap of 150% asset coverage of debt (equivalent to 200% debt to equity), the company has historically maintained a cushion to the regulatory limitati
Slide 14: Interest Coverage
Interest Coverage Year ended September 30, In Thousands 2018 2019 2020 Net investment income (NII) $23,088 $24,580 $25,163 Interest expense 5,858 8,037 9,991 Preferred stock dividends 3,105 3,105 9 Amortization of deferred financing fees 1,014 1,348 1,484 NII before fixed charges $33,065 $37,070 $36
Slide 15: Established Platform Externally Managed by Gladstone Management Corporation
Established Platform Externally Managed by Gladstone Management Corporation Experienced Team with Diverse Skills $3.0 billion under management by a leading alternative asset manager Leverage experience to differentiate/ source attractive LMM investments 20-year history of investing across lower midd
Slide 16: Appendix: Gladstone Capital Summary Results for September 30, 2020 Quarter
Appendix Gladstone Capital Summary Results for September 30, 2020 Quarter
Slide 17: Gladstone Capital 9/30/2020 Quarter Summary
Gladstone Capital 9/30/2020 Quarter Summary Originations/Portfolio Activity: Invested $21.9 million during the quarter, including $20.7 million first lien proprietary debt investment in a new PE sponsored platform in the aerospace sector. Repayments and net proceeds totaled $22.6 million, including
Slide 18: Gladstone Capital 9/30/2020 Quarter Summary: Capital Base and Liquidity
Gladstone Capital 9/30/2020 Quarter Summary Capital Base and Liquidity Liabilities declined to $225.4 million as of 9/30/2020, consisting of $128.0 million in borrowings on our credit facility, $57.5 million of our 6.125% 2023 senior notes, and $38.8 million of our 5.375% 2024 senior notes. Leverage
Slide 19: Gladstone Capital Origination Activity
Gladstone Capital Origination Activity The 9/30/20 quarter capped a solid year of net investment growth, driven by $150 million of originations. Weighted average yield was unchanged on the quarter as Libor floors are in effect across the floating asset base.
Slide 20: Gladstone Capital Portfolio Trends
Gladstone Capital Portfolio Trends Net originations over the last four quarters have averaged almost $20 million per quarter supporting an increase in the core interest income and improved expense efficiencies. Originations have also supported a gradual increase in total investments after a Q2 that
Slide 21: Portfolio Composition
Portfolio Composition **Weighted average yield on interest bearing debt investments (excludes non-accruals and reserves on interest receivables) Note: $’s are in (000’s)
Slide 22: Representative Portfolio Investments
Representative Portfolio Investments
Slide 23: Quarterly Financial Summary
Quarterly Financial Summary
Slide 24: Corporate Data
Corporate Data Janney Montgomery Scott Mitchel Penn Ladenburg Thalmann Mickey Schleien Wedbush Securities Henry J Coffey, Jr. Executive Officers David Gladstone Chairman & CEO Terry Lee Brubaker Vice Chairman & COO Bob Marcotte President Nicole Schaltenbrand CFO & Treasurer Gladstone Capital: www.gl