Slide 1: Investor Presentation for the Fiscal Quarter Ended September 30, 2023
Investor Presentation for the Fiscal Quarter Ended September 30, 2023 FINANCING FOR LOWER MIDDLE MARKET COMPANIES
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: Gladstone Capital Overview
Gladstone Capital Overview Background: − Gladstone Capital was founded in 2001 as one of the first business development companies (BDC) focused on making loans to lower middle market U.S. businesses ($3-15MM of EBITDA) − Gladstone Capital is funded through publicly traded common stock (Nasdaq: GLAD)
Slide 4: Why Invest in a BDC?
Why Invest in a BDC? BDCs are regulated by the SEC, which mandates asset diversity, investor transparency via quarterly SEC filings including fair value adjustments of all assets and limits financial leverage to a maximum of 2:1 debt to equity leverage. BDCs typically operate as regulated investment
Slide 5: Strategy and Risk Management
Gladstone Capital Strategy and Risk Management Investment Strategy: Originate secured debt investments in established lower middle market companies with sustainable margins/cash flows to support a leveraged capital structure and favorable growth characteristics to deleverage risk profile Target
Slide 6: Attractive Lower Middle Market Dynamics
Attractive Lower Middle Market Dynamics Why we target lower middle market (“LMM”) companies Greater industry diversity and more consistent flow of growth-oriented investment opportunities LMM companies typically sell for lower cash flow multiples, which translates into reduced financial leverage
Slide 7: 9/30/2023 Quarter Summary
Gladstone Capital 9/30/2023 Quarter Summary Originations/Portfolio Activity: New investments totaled $27.4 million during the quarter, all of which were in support of the growth of existing portfolio companies. Repayments and net proceeds totaled $41.0 million, primarily driven by a sizeable prepa
Slide 8: Origination Activity
Gladstone Capital Origination Activity Originations for the quarter ended September 30, 2023 were below trend as we entered the quarter closely managing our overall leverage and with a cautious view on investment leverage levels in the face of slowing price escalation and elevated interest rates.
Slide 9: Portfolio Trends
Gladstone Capital Portfolio Trends While FY 2023 deal activity has been volatile, our investment portfolio has grown by $55 million to over $700 million. PE sponsor demand for unitranche financings has lifted 1st lien investments to 72.5% of the portfolio. Approximately 89.2% of our loan portf
Slide 10: Portfolio Metrics
Portfolio Metrics Consistent with GLAD’s LMM focus, the core loan portfolio continues to represent companies with an average EBITDA of approx. $11.7 million and an average leverage attachment point of <4.0x EBITDA *For the purposes of this presentation, certain investments have been excluded from th
Slide 11: Industry and Deal Sources Are Diversified
Industry and Deal Sources Are Diversified Portfolio Diversification Across 12 Deal Source Composition - Industries - At 9/30/2023 Fair Value At 9/30/2023 Fair Value Page 11
Slide 12: Portfolio Composition
Portfolio Composition Portfolio Characteristics As Of: December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 Total Portfolio - FV $ 621,739 $ 678,759 $ 715,324 $ 704,815 # of Portfolio Companies 50 51 52 51 Average Investment Size - FV $ 12,435 $ 13,309 $ 13,756 $ 13,820 Top 5 Investment
Slide 13: Representative Portfolio Investments
Representative Portfolio Investments ANTENNA RESEARCH ASSOCIATES, INC. designs HH-INSPIRE ACQUISITION, INC. is a plastic and manufactures radio frequency based surgery and aesthetic center offering a antenna sub-systems and integrated antenna comprehensive range of cosmetic surgeries and systems for
Slide 14: Quarterly Financial Summary
Quarterly Financial Summary Three Months Ended In Thousands, except per share data September 30, 2022 December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 Income: Interest Income $ 15,567 $ 18,367 $ 19,578 $ 21,816 $ 23,269 Other Investment Income 372 927 983 $ 1,007 $ 487 Total Investm
Slide 15: 9/30/2023 Quarter Summary
Gladstone Capital 9/30/2023 Quarter Summary Capital Base and Liquidity Total Assets decreased to $719.5 million as of September 30, 2023, consisting of $704.8 million in investments at fair value and $14.7 million in cash and other assets. Leverage as of September 30, 2023 decreased significantl
Slide 16: Corporate Data
Corporate Data Executive Officers Research Coverage Websites David Gladstone Janney Montgonery Scott LLC Gladstone Capital: Chairman & CEO John Rowan www.gladstonecapital.com Terry Lee Brubaker Jefferies Investment Adviser: COO Kyle Joseph www.gladstonemanagement.com Bob Marcotte Ladenburg Thalmann