Gladstone Investment Corporation - Business Development Company · NASDAQ:GAIN
Gladstone Investment Corporation - Business Development — Gladstone Investment — Investor Day (September 2024)
38 slides from Gladstone Investment Corporation - Business Development's investor day presentation, Sep 27, 2024
Slide 1: Investor Day Presentation September 27, 2024
INVESTOR DAY PRESENTATION September 27, 2024
Slide 2: Legal Disclaimer
Legal Disclaimer This presentation may include forward-looking statements. These forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any futu
Slide 3: Investor Day Presentation Agenda
Investor Day Presentation Agenda INVESTOR DAY Who We Are – Overview and Objectives Investment Strategy & Value Creation Current Portfolio, Successful Exits & Market Update Financial Highlights, Shareholder Value & Capital Structure Closing and Q&A 3 3
Slide 4: Who We Are – Overview & Objectives
Investor Day Presentation WHO WE ARE – OVERVIEW & OBJECTIVES 4
Slide 5: Gladstone Investment | Who We Are
WHO WE ARE – OVERVIEW & OBJECTIVES Gladstone Investment | Who We Are The Gladstone Companies were founded in 2001 and are comprised of two publicly traded BDCs and two publicly traded REITs. SIGNIFICANT CAPITAL EXPERIENCED MANAGEMENT TEAM SUCCESSFUL LAUNCH OF RAISED AND DEPLOYED (1) WITH PROVEN TRAC
Slide 6: Gladstone Investment | Overview
WHO WE ARE – OVERVIEW & OBJECTIVES Gladstone Investment | Overview Differentiated buyout structure • Primary equity investor – lead sponsor in majority of prospective transactions, often partnering with existing management teams • Differentiated approach – turnkey provider of the equity & secured de
Slide 7: Gladstone Investment | Overview
WHO WE ARE – OVERVIEW & OBJECTIVES Gladstone Investment | Overview Evergreen fund structure creates alignment with management • Investment decisions not guided by fundraising or end-of-fund deadlines versus a traditional buy-out fund GAIN is differentiated • Provides portfolio company boards and man
Slide 8: Gladstone Investment | Overview
WHO WE ARE – OVERVIEW & OBJECTIVES Gladstone Investment | Overview Delivering to investors consistent and increasing distributions • Senior secured debt provides downside protection, along with the upside potential of GAIN’s equity investments Investment structure creates • No third-party sponsor ri
Slide 9: Upside Potential Driven by Focus on Equity Securities
WHO WE ARE – OVERVIEW & OBJECTIVES Upside Potential Driven by Focus on Equity Securities • GAIN’s equity ownership provides further upside potential to shareholders through prospective Meaningful Equity Component in GAIN Portfolio1 capital gains and other income from successful exits which support s
Slide 10: Growing Portfolio
WHO WE ARE – OVERVIEW & OBJECTIVES Growing Portfolio From 4/1/2010 to 6/30/2024, we have: • Made investments in 45 new companies of approximately $1.3 billion1 • Exited 31 companies for a return of proceeds of $920.8 million1,2 $1,000.0 $920.5 $899.1 $900.0 $800.0 $753.5 $714.4 Total investments, at
Slide 11: History of Strong Monthly and Supplemental Distributions
WHO WE ARE – OVERVIEW & OBJECTIVES History of Strong Monthly and Supplemental Distributions • From inception through 6/30/24, GAIN has paid 228 consecutive monthly distributions to common shareholders • GAIN’s regular annual distribution run-rate has increased 100% from $0.48 per common share in FY1
Slide 12: Investment Strategy & Value Creation
Investor Day Presentation INVESTMENT STRATEGY & VALUE CREATION 12
Slide 13: Investment Focus and Process
INVESTMENT STRATEGY & VALUE CREATION Investment Focus and Process Investment Focus • Target stable lower middle market companies with EBITDA of $4 – $15 million • Investment size (debt & equity) generally up to $75 million (typically 25% equity & 75% debt) • Lead or co-lead prospective transactions
Slide 14: Investment Focus and Process
INVESTMENT STRATEGY & VALUE CREATION Investment Focus and Process Deal Sourcing • Source opportunities from investment banks, M&A advisory firms, and industry executives Driving performance with • Regionally focused sourcing strategy, spearheaded by senior member of the investment team a focused and
Slide 15: Risk Management and Value Creation
INVESTMENT STRATEGY & VALUE CREATION Risk Management and Value Creation GAIN takes a long-term approach with a strategy to deploy debt & equity designed to streamline post-close value creation. 1 2 CERTAINTY AND INVESTMENT HORIZON SPEED TO CLOSE No third-party capital required to Long-term investmen
Slide 16: Value Creation Across the Portfolio
INVESTMENT STRATEGY & VALUE CREATION Value Creation Across the Portfolio Equity ownership allows GAIN to effect change with its investments. EXPERIENCED SALES AND STRATEGIC PLANNING ADD-ON AND PLATFORM STRATEGIES GOVERNANCE STRUCTURE OPERATIONAL INITIATIVES GAIN helps to establish an effective At th
Slide 17: Platform Investments
INVESTMENT STRATEGY & VALUE CREATION Platform Investments We continue to actively invest in new platform opportunities and strategic investments in existing portfolio companies. NOCTURNE LUXURY VILLAS, INC. (“Nocturne”) Platform Acquisitions: July 2024, August 2023, October 2022, May 2022, December
Slide 18: Value Creation and Add-On Strategy
INVESTMENT STRATEGY & VALUE CREATION Value Creation and Add-On Strategy We continue to work closely with our portfolio companies to effect meaningful change. SPECIALIZED FABRICATION EQUIPMENT GROUP, LLC (“SFEG”) Add-on Acquisitions: October 2023 ($64.7MM total add-on), January 2022 ($5.0MM total add
Slide 19: Current Portfolio, Successful Exits & Market Update
Investor Day Presentation CURRENT PORTFOLIO, SUCCESSFUL EXITS & MARKET UPDATE 19
Slide 20: Portfolio is Broad and Diversified
CURRENT PORTFOLIO, SUCCESSFUL EXITS & MARKET UPDATE Portfolio is Broad and Diversified 1 MANUFACTURING BUSINESS/CONSUMER SERVICES CONSUMER PRODUCTS 1 Portfolio companies as of 6/30/2024. 20
Slide 21: Geographic Diversification
CURRENT PORTFOLIO, SUCCESSFUL EXITS & MARKET UPDATE Geographic Diversification 1 1 Portfolio companies as of 6/30/2024. 21
Slide 22: Recent Buyout Investments
CURRENT PORTFOLIO, SUCCESSFUL EXITS & MARKET UPDATE Recent Buyout Investments We continue to actively invest in new buyout opportunities and strategic investments in existing portfolio companies. HOME CONCEPTS HOLDINGS, LLC THE E3 COMPANY, LLC Acquired: May 2023 Acquired: September 2023 Investment S
Slide 23: Historical Exits
CURRENT PORTFOLIO, SUCCESSFUL EXITS & MARKET UPDATE Historical Exits MANUFACTURING BUSINESS/CONSUMER SERVICES CONSUMER PRODUCTS 23
Slide 24: Recent Successful Exits
CURRENT PORTFOLIO, SUCCESSFUL EXITS & MARKET UPDATE Recent Successful Exits We continue to exit mature investments, generating meaningful realized capital gains. COUNSEL PRESS HOLDINGS, INC. NTH DEGREE INVESTMENT GROUP, LLC Initial Investment: March 2015, invested $23.5MM debt & $7.0MM equity Initia
Slide 25: Buyout Market Update
CURRENT PORTFOLIO, SUCCESSFUL EXITS & MARKET UPDATE Buyout Market Update Increased deal flow leading to more actionable opportunities • GAIN primarily targets two sets of intermediaries to obtain deal flow: o Investment Banks – increasingly focused on running specialized bidding processes that targe
Slide 26: ESG Basics
ENVIRONMENTAL, SOCIAL, & CORPORATE GOVERNANCE (ESG) ESG Basics What is ESG? Why ESG and why now? Framework that helps stakeholders – investors, partners, portfolio Preserve, and in some instances, create value companies, and communities – understand the impact a company has on the environment and so
Slide 27: Gladstone Investment ESG Program
ENVIRONMENTAL, SOCIAL, & CORPORATE GOVERNANCE (ESG) Gladstone Investment ESG Program Task Detail Status Governance Documents • Board approval and publication on fund website of • ESG Policy published October 2023 governance documents, including ESG Policy and Board • Board Diversity Matrix regularly
Slide 28: Financial Highlights, Shareholder Value & Capital Structure
Investor Day Presentation FINANCIAL HIGHLIGHTS, SHAREHOLDER VALUE & CAPITAL STRUCTURE 28
Slide 29: Continuous NAV Growth Since FY 2011
FINANCIAL HIGHLIGHTS, SHAREHOLDER VALUE & CAPITAL STRUCTURE Continuous NAV Growth Since FY 2011 • Continuous growth in overall NAV since FY 2011, driven by diligent growth and value creation in investment portfolio • Significant NAV per share growth to $13.01 at 6/30/2024 from $9.00 at 3/31/2011 $1,
Slide 30: Investment Income Growth Since FY 2011
FINANCIAL HIGHLIGHTS, SHAREHOLDER VALUE & CAPITAL STRUCTURE Investment Income Growth Since FY 2011 • Significant growth in Investment Income since FY 2011, driven by growth in investment portfolio, increased yields and other income. • Other income is comprised of dividends on preferred investments a
Slide 31: Successful Realizations Enhance Shareholder Value
FINANCIAL HIGHLIGHTS, SHAREHOLDER VALUE & CAPITAL STRUCTURE Successful Realizations Enhance Shareholder Value History of exits generating significant capital gains. GAIN’s target investment mix of 75% debt and 25% equity provides potential for high returns through consistent current yield and capita
Slide 32: Financial Highlights
FINANCIAL HIGHLIGHTS, SHAREHOLDER VALUE & CAPITAL STRUCTURE Financial Highlights1 THREE MONTHS ENDED FISCAL YEAR ENDED JUNE 30, 2024 MARCH 31, 2024 MARCH 31, 2023 MARCH 31, 2022 MARCH 31, 2021 Net investment income (NII) $ 12,414 $ 21,777 $ 37,000 $ 14,990 $ 17,938 (+) Capital gains-based incentive
Slide 33: History of Driving High Shareholder Returns
FINANCIAL HIGHLIGHTS, SHAREHOLDER VALUE & CAPITAL STRUCTURE History of Driving High Shareholder Returns Long-term return on equity outperforming compared to industry peer group.1 Return on Equity 6/30/2024 16% 15% 14% 14% 13% 12% 12% 11% 10% 10% 9% 9% 9% 9% 8% 8% 8% 6% 4% 2% 0% 1-Year 3-Years 5-Year
Slide 34: History of Driving High Shareholder Returns
FINANCIAL HIGHLIGHTS, SHAREHOLDER VALUE & CAPITAL STRUCTURE History of Driving High Shareholder Returns Greater long-term total return compared to BDC peer group.1 5- AND 10-YEAR TOTAL RETURNS OF 106% AND 395% VS. BDC INDUSTRY PEERS OF 72% AND 109% 5-Year Total Return 10-Year Total Return 240% 550%
Slide 35: Capital Structure: Conservative Approach
FINANCIAL HIGHLIGHTS, SHAREHOLDER VALUE & CAPITAL STRUCTURE Capital Structure: Conservative Approach PUBLICLY TRADED NOTES • GAINN: $127.9MM of 5.00% 2026 Notes • GAIN maintains a conservative balance sheet with low leverage and available liquidity to support needs of the • GAINZ: $134.6MM of 4.875%
Slide 36: Closing and Q&A
Investor Day Presentation CLOSING AND Q&A 36
Slide 37: Continue to Execute on Strategy
OUTLOOK Continue to Execute on Strategy EXECUTE ON BUYOUT STRATEGY • Expand portfolio through attractive investments • Drive portfolio company value creation through active ownership Disciplined underwriting and continued portfolio performance allows GAIN to PROVIDE STRONG AND GROWING DISTRIBUTIONS
Slide 38: Corporate Data
Corporate Data Key Executive Officers Research Coverage Websites Independent Directors David Gladstone B. Riley Securities Gladstone Investment: Paul Adelgren Chairman & CEO Bryce Rowe www.gladstoneinvestment.com Michela A. English Janney Terry Lee Brubaker John Rowan Investment Adviser: Katharine C